Scottish Court of Session Decisions

Alexander Charles Hamilton, Lord Belhaven and Stenton, was infeft by extract-decree of special service recorded in the Division of the General Register of Sasines applicable to the county of Lanark on 27th July 1894 in certain lands on which the Earl of Home was the superior. These lands included parts of the coalfields known as Knownoble and Glenclelland.

On 1st February 1897 the Earl of Home, the immediate lawful superior in the said lands, brought an action of declarator and for payment of a casualty against Lord Belhaven, in which he claimed one year's rent of the lands in question as a composition. In support of this claim be made the following averment:—“(Cond. 8) The defender is a singular successor in the whole lands described in the summons, and the casualty of a year's rent thereof became due to the pursuer as superior on the 27th day of July 1894, being the date of the infeftment of the defender in the whole of the said lands described in the summons, at which date the said defender became impliedly entered with the pursuer as superior under and in virtue of

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the Conveyancing (Scotland) Act 1874. The said casualty is still unpaid and unsatisfied, and the pursuer has repeatedly requested the defender to make payment of a year's rent of the said whole subjects, which is believed to amount to one or other of the following sums or thereby, viz.—(1) £1966, 18s. 4d., (2) £1666, 18s. 4d., or (3) £966, 18s. 4d.”

In answer to this averment Lord Belhaven admitted that a casualty of composition was due, but averred that the amount claimed was grossly excessive.

The pursuer pleaded—“(1) A casualty of one year's rent of the whole lands described in the summons having become due to the pursuer as superior thereof by the defender, the pursuer is entitled to decree as concluded for. (2) The pursuer being superior of the lands described in the summons, and not having received any casualty in respect of the infeftment and consequent implied entry of the defender, is entitled to decree as concluded for.”

On 20th March 1897 the Lord Ordinary ( Pearson) pronounced an interlocutor, by which he appointed the pursuer to lodge a statement of composition by the first box-day, and the defender to answer said statement.

From the statement and answers it appeared that the parties were agreed that a sum of £166, 18s. 4d. was due as composition for the surface rents of the lands in question, but differed as to the amount due in respect of the minerals. The parties were agreed for the purposes of this case as to the amount of coal still remaining unworked in the lands as at 1894. Upon the basis of the number of tons so fixed by agreement of parties the total amount which the defender would receive in lordships or otherwise therefrom was £5540, 8s.

The Earl of Home made the following alternative claims:—“1. As regards the Glenclelland minerals held of him—(1) A sum equal to the average annual lordships received over a period of seven or ten years, which the pursuer believes is moderately stated at £1320, but in no event to be less than the proportion of the fixed rent applicable to these, viz., £500. (2) A sum equal to the actual lordships received for the year from Whitsunday 1893 to Whitsunday 1894, which the pursuer believes is moderately stated at £800, but in no event to be less than the proportion of the said fixed rent, viz., £500. 2. As regards Knownoble-(l) A sum equal to the average annual lordships received over the period from Whitsunday 1800 to Whitsunday 1894, which the pursuer believes is moderately stated at £539, but in no event to be less than the proportion of the fixed rent applicable thereto, viz., £250. (2) A sum equal to the actual lordships for the year from Whitsunday 1893 to Whitsunday 1894, which the pursuer believes is moderately stated at £700, but in no event to be less than the proportion of the fixed rent applicable thereto, viz., £250.”

Lord Belhaven did not admit that the sums above alleged to have been received were correctly stated, but in the view taken by the Court the exact figures are not material. He denied that the Earl of Home was entitled to either of the alternative claims made by him, and maintained that the fair annual value of the minerals at the date of his entry must be ascertained by capitalising the value as at that date of the lordships receivable by the vassal from the minerals still remaining unworked as at that date, subject to a discount of four per cent. He averred that the result would be a capital sum of £3652, 7s., and that the annual value of the minerals should be arrived at by taking 4 per cent. on that capital sum, and that the composition due amounted therefore to £146, 1s. 10d. From this sum he claimed to be entitled to deduct the landlord's proportion of public and parish burdens for the year to Whitsunday 1895.

In arriving at the capital sum of £3652, 7s., Lord Belhaven deducted way leave at the rate of 1d. per ton from the lordship to be derived from the Glenclelland colliery, in view of the fact (which was not disputed) that these minerals were raised to the surface by a pit and shafting which were situated in ground held by him of a different superior.

On 20th July 1898 the Lord Ordinary pronounced the following interlocutor—“Finds it is admitted that the sum of £166, 18s. 4d. is due by the defender in name of composition in respect of the surface of the lands libelled: Finds that as regards the minerals the defender is due to the pursuer in name of composition 4 per cent. of the total amount received and to be received by the defender in lordships or otherwise for the coal which remained unexhausted at 27th July 1894, so far as held of the pursuer as superior, the said amount being calculated (1) after deducting the estimated public and parish burdens effeiring to the assumed annual payments on which the calculation is based, and (2) after discounting interest at 4 per cent. per annum from said 27th July 1894 upon the net annual payments, but without any deduction in respect of way leave for the Glenclelland minerals: Appoints the cause to be enrolled for the application of these findings and for further procedure: Reserves the question of expenses, and grants leave to reclaim.”

Opinion.—“The pursuer is superior of the five subjects set forth in the summons; and he sues for a composition of one year's rent of the lands as at 27th July 1894, being the date of the defender's infeftment.

The parties are agreed as to the sum due in name of composition in respect of the surface rents. But the lands contain minerals in course of being worked, and important questions are raised as to the basis on which composition on the mineral returns is to be calculated.

It was decided in the case of Allan's Trustees v. Duke of Hamilton (1878, 5 R. 510) that mineral returns are to be taken into computation in such a question. The decree bears that in estimating the year's rent due to the superior ‘the annual value of the minerals in the course of being worked must be included.’ This decision was arrived at after a report by Mr Edmund

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Baxter, W.S., as to the practice in such cases. He reported that there had not been any practice of such a nature as to assist materially in the solution of the question. The Lord Justice—Clerk, in giving judgment, states the question to be whether the superior's right to one year's rent of the lands ‘includes the rents stipulated in a lease of minerals.’ He adds—‘The record is exceedingly imperfect in its statement in regard to the actual lease in question; but I assume that the amount claimed by the superior represents either fixed rent or sums calculated on output by way of royalty payable under a current lease of minerals in process of being worked. It is not said that there is any danger of the minerals being exhausted, and I shall assume that there is none.’

The Court did not find it necessary in that case to settle the principle of calculation. It is, however, discussed by two of the Judges, who indicate that regard should he had (1) to the uncertainty and risk which attend mineral workings, and (2) to the question whether the minerals are nearly exhausted. They indicate that the first thing is to ascertain the number of years' purchase which the minerals are fairly worth, and that 4 per cent. or other fair percentage on the capital value so ascertained may be regarded as the constant annual value.

In that case the minerals had been leased by the proprietors. In Sivwright v. Straiton Estate Company (1879, 6 R. 1209) the proprietors had recently bought the estate for the purpose of working the minerals themselves, and had so worked them for about two years. A remit was made to an accountant to make up a statement of the annual rent and whole mineral and other profits and returns derivable by the defenders from the subjects. The accountant made up a statement on the basis of the rates adopted by the assessor in making up the valuation roll. Having thus obtained an average return he capitalised it at ten years' purchase, and stated interest on the capital sum at 4 per cent. as the yearly value payable for composition. There being various kinds of mineral in the estate, a remit was then made to a mining engineer to report the number of years' purchase which the respective minerals were fairly worth. He reported that as to some of the minerals fifteen years' purchase should be taken, as to others ten years, and as to others five years. The Court first took an average of three years' returns, and they found ten years' purchase of that to be the sum which ‘in the present case it is equitable to adopt as the basis for calculating the casualty.’ and that 4 per cent. on the sum so obtained represented the annual value. The superior, while accepting the principle of taking an average of years, objected to his claim being cut down to a percentage on a capitalised sum. But the Court (as the report bears) did not even call for a reply on this part of the case.

In the case of Sturrock v. Carruthers' Trustees (1880, 7 R. 799) the minerals were under a lease for five years at a fixed rent of £600 at the time the casualty fell due. They had never been worked at all except to a small extent; but it was not alleged that there was any prospect of their being soon exhausted. The defenders contended that there should be an inquiry into the actual amount of minerals wrought, and that the rule pointed at in the case of Allan's Trustees should be applied, notwithstanding the existence and the payment of the fixed rent. It was held that, as the minerals were not being wrought except to a trifling extent, and were not alleged to be exhausted, and as the fixed rent seemed to be a fair average rent, it should be taken as showing the annual value. Lord Ormidale, however, expressed a doubt whether there should not have been a remit to a mining engineer to report the number of years' purchase which the minerals were fairly worth, as in the case of Allan's Trustees.

In the present case the facts are substantially admitted. The minerals are under lease, which stipulates for fixed rent or lordships in the landlord's option. The fixed rent was £1000 a-year from Whitsunday 1892 to Whitsunday 1894, and £750 yearly thereafter until certain specified minerals are exhausted, after which the fixed rent is to be £500 for the remainder of the lease, which is stated to be for twenty-one years from Whitsunday 1892, with breaks in the tenant's favour at Whitsunday 1894 and every three years thereafter. The peculiarity of the present case is, that in the year when the casualty became due (which I take to be the year ending Whitsunday 1895) the minerals were rapidly approaching exhaustion; and the parties are agreed (subject to certain reserved questions which I will deal with presently) that the total amount which the defender will receive from the subjects in lordships or otherwise for unexhausted coal as at 1894 is £5540, 8s.

The defender's contention is that, subject to certain deductions, that sum is to be taken as the basis of the calculation, and that four per cent. upon it must be taken as the annual value for composition. This would amount, on the defender's figures, to £146, 1s. 10d., subject to deduction for public burdens.

The pursuer, on the other hand, claims a much larger sum. He claims alternatively on the basis (1) of averaging the lordships, (2) of the actual lordships received for the year of entry, or (3) of the fixed rents. The first of these yields a sum of £1859 for the minerals, the second £1500, and the third £750.

If the question had been entirely open, I should have thought that once it was settled that mineral returns were not to be left out of the computation, the pursuer's first alternative furnished the true measure of the ‘year's maill as the land is set for the time,’ in all cases where the minerals are under lease, and that in any view the fixed rent would furnish the minimum claim. But the tendency of judicial opinion has been distinctly the other way. In the

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case of Sturrock, where the fixed rent was taken as the basis, the decision proceeded on the ground that the minerals were not being wrought except to a trifling extent, and that the minerals were not alleged to be approaching exhaustion. I presume that the words of the Lord Justice-Clerk (that ‘under a lease it is only reasonable to take the rent as showing what the value is’) must be taken in connection with those facts in the case. In declining to adopt the alternative of fixing a number of years' purchase so as to ascertain the value of the minerals, Lord Gifford expressly says—‘No doubt, when mineral rent is paid by lordships, and when the minerals are approaching exhaustion, this may require to be done.’ And in the case of Allan's Trustees it was plainly indicated that, where minerals were nearly exhausted it was specially inequitable to take the return for the year, or for an average of years, as the composition, and that the subject must be capitalised and a percentage taken.

But indeed the present case appears to me to be ruled by the case of Sivwright, unless its application is excluded by the speciality that there the minerals were not under lease but were worked by the vassal. If this distinction were to receive effect it would come to this, that where there is no lease the process suggested in Allan's Trustees and adopted in Sivwright would be followed; but where the minerals are let, the actual return, possibly averaged over a few years, would be stated as the composition. I think it would be found in practice that this would result in a much higher scale of composition where the minerals are let than where they are worked by the vassal. The fact is that the purpose in both cases is to ascertain how much of the actual or assumed return is truly annual rent or value; and where the minerals are approaching exhaustion it becomes especially clear that the annual return, whether actual or assumed, includes more than can be regarded as a constant value. The decree in Sivwright proceeded, it is true, upon equitable considerations; but if the result there was equitable, I think the same process should yield a similar result here. The difference is, that as the minerals are near exhaustion, and the parties are agreed on their value, the usual inquiry is superseded,

I therefore think that the defender's contention is substantially correct, and in conformity with the principles which have been laid down in the previous cases. I now revert to certain deductions which the defender claims.

First, he maintains that the Glenclelland lordships, which have been taken into account in fixing the total value of £5540, 8s., should have been abated by one penny per ton in name of wayleave. That mineral field is only partly within the pursuer's superiority; and it happens that the shaft by which the minerals are got is situated outside the superiority lands. The defender says that if the ownership had been divided as the superiority is, the owner of the minerals where the shaft is situated would have been in a position to exact a payment for wayleave from the other mineral owner. When stated generally, this is undeniable; but I do not think it would be safe to isolate that circumstance and use it to lessen the pursuer's claim. If the facts as to the two fields were fully known, it may well be that there are counterbalancing advantages in working or letting the two as one, which would compensate for any such suggested claim in respect of wayleave.

The defender further maintains that the money value should be fixed as in 1894–5; and that the assumed yearly output which results in the admitted figure should be subject to rebate of interest, otherwise the 4 per cent. will be calculated on a larger sum than the vassal will really draw. In this I think the defender is right. I assume that the figures have not been so discounted already, and that the words ‘as at 1894’ in statement 9 refer to the quantity of minerals and not to the money calculation.

Then the defender claims deduction of the landlord's proportion of public and parish burdens for the year to Whitsunday 1895, corresponding to the sum brought out as 4 per cent. of the capital value. I should have thought the proper course of calculation was to deduct the estimated public burdens from the estimated mineral returns for each year of assumed working before bringing out the net value. There does not seem to be a sufficiently close relation between the 4 per cent. and the returns on which the assessments will be paid to render the mode of deduction proposed by the defender a safe or equitable one. I therefore think that the calculation should be re-stated accordingly.”

The pursuer reclaimed.

After counsel had been partly heard on the reclaiming-note the Court appointed the case to be heard before seven judges.

Argued for the reclaimer—It was really settled law that minerals in the course of being worked were to be taken into account in fixing a composition. That was definitely decided in Allan's Trustees v. Duke of Hamilton, Jan. 12, 1878, 5 R. 510, and although that case might be open to review by a Court of Seven Judges, it should not be disturbed, because it proceeded on a very careful examination of the authorities and a report on the practice, and had been regarded by the profession as settling the point. Assuming Allan's Trustees to be good law, the question remained how the casualty was to be fixed. The proper criterion was either the amount received from the minerals in the actual year of entry, or an average of the amounts received during the years in which they had been worked. In strict law the former principle was the correct one. Historically the superior was not bound prior to the Act 1469, c. 36, and subsequent statutes, to grant an entry to singular successors at all. He would therefore have then been entitled to the whole produce of the lands, and the measure of his rights at the present day was his original rights minus the restrictions thereon made by statute. The first

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restriction was by the Act 1469 cap. 36. It was there provided—“And also the over-lord shall receive the creditour or ony uther byer, tennent till him, payand to the over-lord a zeires maill, as the land is set for the time. And failzieing thereof, that he take the said land till himselfe and undergang the debtes.” No doubt that statute contemplated a particular case, which was not the ordinary case of a composition, but the measure established by that statute “a year's maill, as the land is set for the time,” had in all the subsequent decisions been regarded as the proper limitation of the superior's rights. In the earliest case— Magistrates of Inverness v. Duff, Jan. 23, 1771, M. 9300, an average of years was taken, but the point was not considered. The rule of a year's maill was adopted, after a report on the practice, in Aitchison v. Hopkirk, Feb. 14, 1775, M. 15,060, 2 Ross' Lead. Cas. 183. The following cases were authorities to the same effect:— Ross v. Governors of Heriot's Hospital, June 6, 1815, F.C., opinion of Lord Bannatyne, p. 407: Campbell v. Westenra, June 28, 1832, 10 S. 734; Lord Blantyre v. Dunn, July 1, 1858, 20 D. 1188, per Lord Curriehill, at p. 1198; Stewart v. Bulloch, Jan. 14, 1881, 8 R. 381, where the Lord President Inglis said, p. 383—“It is not disputed that the superior's right to a composition depends entirely on the old statute 1469, c. 36, and what he is entitled to require in the name of composition is “a year's maill as the land is set for the time;” School Board of Neilston v. Graham, Nov. 16, 1887, 15 R. 44. Later statutes compelling the superior to receive adjudgers (Act 1672, c. 19), and singular successors (20 Geo. II. c. 50, sec. 13) did not expressly provide any measure by which the superior's rights were to be estimated. By the last cited statute he is to receive “such fees or casualties as he is by law entitled to receive”—that is, it is contended, the year's maill provided by the Act 1469, c. 36. The year to be taken was the year of the vassal's entry— Houstoun v. Buchanan, March 1, 1892, 19 R. 524; Bell's Prin., sec. 790. If, then, the right of the superior depended on the Act 1469, c. 36, it was irrelevant to argue that the result might sometimes appear inequitable. Even if the whole minerals were worked out in the year of entry, the superior was entitled to the whole sum received. Arguments on the supposed injustice of this were really arguments against the inclusion of minerals in estimating composition at all. The principle given effect to by the Lord Ordinary should logically lead to the inclusion of minerals, even if entirely unworked, which had been held not to be law in M'Laren v. Burns, Feb. 18, 1886, 13 R. 580, opinion of Lord Rutherford Clark, p. 585. The question as to how minerals were to be estimated in fixing provisions under the Aberdeen Act had been settled in favour of taking the year of the granter's death— Wellwood v. Wellwood, July 12, 1848, 10 D. 1480; Lord Belhaven v. Lady Belhaven, Jan. 23, 1896, 23 R. 423. There the words of the Aberdeen Act, on which the question depended, were “the free yearly rent of the lands, … all as the same may happen to be at the death of the grantor.” These words were practically identical with those used in the Act 1469, c. 36, “a year's maill as the land is set for the time.” Therefore the decision in the case above cited, that the Aberdeen Act provision was to be computed on the actual revenue derived from the minerals in a particular year, was a very strong authority in favour of adopting the same principle in the computation of a composition. The case of Sivwright v. Straiton Estate Co., July 8, 1879, 6 R. 1208, on which the Lord Ordinary mainly relied, was wrongly decided. The opposite decision was arrived at in Sturrock v. Carruther's Trustees, May 21, 1880, 7 R. 799. Any opinions in that case to the effect that if there were not a fixed rent the year's receipts could not be taken, were, together with the decision in Sivwright, vitiated by the fact that they overlooked that the question was not what was equitable, but what was the meaning of the words of the Act 1469, c. 36.

Argued for respondent—(1) Minerals should not be taken into account in estimating a casualty. Allan's Trustees v. Duke of Hamilton ( cit. supra) could be reviewed by this Court, and was wrongly decided. If the question depended on the Act 1469, cap. 36, it could not be contended that minerals were ever thought of at that date as constituting part of a “year's maill.” The Court in Allan's Trustees were misled by the false analogy of the cases under the Aberdeen Act, which had no application. In entail questions mineral income must be treated as rent, otherwise the heir would incur a contravention of the entail in working them. That principle was developed in Wellwood v. Wellwood ( cit. supra), but it had no application to the question of a composition, in fixing which mineral rent was not really rent at all, but an alienation of part of the estate. (2) Assuming minerals must be taken into account, the Lord Ordinary had arrived at a proper and equitable result. It was not correct to say that the superior's right to a composition rested on the Act 1469, cap. 36. The words of that Act made it clear that its framers had no intention of fixing a composition. The right to a composition rested on practice. In the report of Aitchison v. Hopkirk in 5 Brown's Supplement, 613, it was stated, “what seemed chiefly to weigh with the Court was the practice.” What the superior was entitled to was the fair annual value of the lands. That could only be arrived at, in the case of minerals, on a fair and reasonable consideration of the circumstances, and the Lord Ordinary had taken a reasonable view. That was the course taken in Sivwright v. Straiton Estate Co., July 8, 1879, 6 R. 1208, which was a direct authority in the respondent's favour, and in Hill v. Caledonian Railway Company, Dec. 21, 1877, 5 R. 386, and was the rule recommended by Professor Montgomerie Bell, Lectures on Conveyancing (3rd ed.) p. 1147. It was followed in the analogous case of the conditions on which coal in a glebe

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could be worked by a parish minister— Minister of Newton v. The Heritors, M. App. voce Glebe, No. 6. The opinions in Sturrock v. Carruthers' Trustees, May 21, 1880, 7 R. 799, showed that the Court thought that in the ordinary case they were not tied down to the receipts of the particular year. To the same effect was the opinion of Lord Ormidale in Allan's Trustees v. Duke of Hamilton (cited supra) at p. 519. There was no authority for the proposition that the superior's right to a composition was derived from an original right, modified by statute, to take possession of the lands himself if the vassal parted with them—Ersk. ii. 5, 29, and ii. 12, 24. The cases under the Aberdeen Act, cited by the other side, had no application. They were decisions on the meaning of words occurring in a modern statute, which left no room for equitable considerations. The right to a composition, as was contended, did not depend upon statute at all; even if it did, it depended on a statute so old and so vaguely expressed as to be open to equitable construction.

At advising—