NSW COAL COMPENSATION BOARD v NSW COAL COMPENSATION TRIBUNAL SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY and STEIN JJA, and GROVE AJA 21-22 April 1997, 29 July 1997 [1997] NSWCA 231 ADMINISTRATIVE LAW — interpretation of Coal Acquisition Act 1981 — whether s5 discharged coal leases. Compensation provisions — whether loss was a 'pecuniary loss' 'directly attributable' to the discharge of the lease. The NSW Coal Compensation Board refused claims brought by the respondent for compensation for pecuniary loss arising from loss of benefits formerly payable to the respondent by the lessee of coal. The alleged losses arose as a result of the Coal Acquisition Act 198 | (CAA) and cognate legislation which vested coal in the Crown and provided for payment of compensation for losses which were 'directly attributable' to the new legislation. The respondents appealed to the Tribunal which found for the respondent. The Board appealed to the Supreme Court (Administrative Division) which dismissed the appeal and from there to this court. On appeal, the appellant sought to argue that: (1) the claims did not arise from the loss of any interest or estate in coal; (2) the losses were not a 'pecuniary loss' as defined in the Arrangements; (3) the losses were not 'directly attributable * to the CAA; (4) if the loss was a pecuniary loss, cl3 of the Arrangements excluded claims by lessees under private leases. Held: The respondent's loss was a pecuniary loss which was directly attributable to the CAA. The claimant's loss is not excluded from recovery by the Arrangements. Central Asbestos Co Ltd V Dodd [1972] All ER 1135. Walsh v Rotter District Council [1978] 1 All ER 510 considered. Stein JA As the trial judge Hamilton AJ observed, prior to 1981 much of the coal in the State was privately owned. This was despite the general policy of the reservation of minerals to the Crown upon the grant of lands. Coal mining took place, to a large extent, under private agreements between land owners and miners. All this changed with the introduction of the Coal Acquisition Act 1981 (the CAA) together with cognate legislation to amend the Coal Mining Act 1973 entitled the Coal Mining (Amendment) Act 1981 (the CMAA). The latter enactment was described as 'An Act to amend the Coal Mining Act, 1973, as a consequence of the enactment of the Coal Acquisition Act 1981'. LEGISLATIVE FRAMEWORK The CAA, which commenced | January 1982, vested all privately owned coal in the Crown. S6 of the CAA authorised the Governor to make arrangements for the determination of any compensation to be payable as a result of the enactment. As a consequence, the Coal Acquisition (Compensation) Arrangements 1985 (the Arrangements) were gazetted on 21 June 1985. The arrangements permitted claims for compensation to be made in two sets of circumstances. First, any person was eligible to make a claim if 'saleable coal' was, prior to 1 January 1982, vested in that person and the coal was situated 2 UNREPORTED JUDGMENTS within a colliery holding between that date and | January 1986. The second circumstance was where a person claimed to have sustained pecuniary loss directly attributable to the discharge of any trust, lease, licence, obligation, estate, interest or contract by virtue of the operation of s5 of the CAA, being a loss not of the first kind just mentioned (cl9). The Coal Compensation Board (the appellant) was created under the Arrangements with the task of determining compensation claims. Also, a tribunal was created to hear appeals from the Board. The NSW Coal Compensation Tribunal is the first respondent and has filed a submitting appearance. The CMAA amended the Coal Mining Act 1973 in a number of respects, including s128 which had the effect of diverting moneys paid under s128(1) (tender moneys for a coal lease and consideration paid for a coal lease) to consolidated revenue. Importantly, the CMAA also contained Savings and Transitional Provisions (schedule 2). The other legislative provision of relevance is the Coal Acquisition (Transitional Provisions) Regulation, 1982 (the Regulation) gazetted on 30 April 1982. This deemed a coal lease to have been granted to a person who, immediately before the appointed day, (1 January 1982) had a right to mine coal in a colliery holding. FACTS The second respondent, Bloomfield Collieries Pty Ltd (Bloomfield), held two leases from Ashtonfields Ltd, which was the owner of coal and surface areas within Bloomfield Colliery Holding. Both leases were granted on 17 December 1979 for a term of 20 years. In order to carry out the coal mining operations access to the surface was necessary. The leases provided the right to win coal, use existing shafts etc and make new ones as necessary, as well as surface rights. Bloomfield was granted a licence to enter upon the land and use surface facilities for the purpose of mining and transporting coal. The consideration for this bundle of rights under the leases was the payment of royalties and rent. Only one amount was payable for all the rights conferred including surface rights. Following the commencement of the CAA and CMAA on | January 1982, a deemed coal lease came into effect over the subject coal, and royalties became payable to the Crown. However, the deemed lease did not arise until 30 April 1982 upon the gazettal of the Regulation. Later, on 28 April 1983, Coal Lease 500 was granted by the Crown to Bloomfield. On 26 March 1984 Bloomfield entered into fresh leases with Ashtonfields over surface areas of the colliery. After gazettal of the compensation arrangements, Bloomfield lodged a claim with the Board for pecuniary loss. The Board refused the claim and Bloornfield appealed to the Tribunal. The Tribunal accepted that Bloomfield had suffered a pecuniary loss under cl9(2) of the Arrangements. It found that the intention of s5 of the CAA was to vest all coal owned by Ashtonfields in the Crown and bring to an end all commitments and arrangements that might relate to that coal. The Tribunal accepted that the effect of s5, standing alone, was to frustrate the 1979 leases in their totality in accordance with ordinary contractual principles. It also concluded that Bloomfield had suffered a pecuniary loss within cl9(2). THE APPEAL TO THE COURT The Board challenged the decision of the Tribunal in the Supreme Court before Hamilton AJ. His Honour delivered judgment on 20 December 1996 finding that the leases were frustrated in their entirety by the operation of the CAA. WRB COAL COMPENSATION BOARD v NSW COAL COMPENSATION TRIBUNAL (Stei& JA) He said: The whole purpose of the contractual arrangement was for the getting of the coal in the land for the mutual financial benefit of Ashtonfields and the second defendant. The colliery was in operation at the commencement of the leases and the provisions of the leases compelled its continued operation. Although the demises of the coal and the grant of the licences may have created separate interests or rights there was but one combined consideration for the coal taken, the right to get it and the right to use the surface of the land including the right to conduct open pit mining and to use railway facilities. Both leases and licences were part of the one arrangement; the principal purpose of that arrangement ceased once the expropriation of the coal took effect. (p11) Hamilton AJ also believed that the leases had been brought to an end by s5 of the CAA without resort to the doctrine of frustration. His Honour stated: The section has the double effect of acquiring the coal and "freeing" it from all trusts, leases, etc. The provision that the coal is "freed of" the leases has the effect of terminating the leases insofar as they related to the coal acquired by the Crown. The statute does not in terms strike down the trusts, leases etc, but merely "frees" the coal from them. But, insofar as the lease is an arrangement between a private owner and miner for the purpose of mining coal for their mutual benefit, the confiscation by the State of all the coal comprehended in the lease and the "freeing" of the coal from the lease must have the effect of bringing that arrangement to an end by force of the statute itself as between the parties who entered into it. It may be that, if the provisions of a particular agreement relating to coal were severable from other provisions of the same agreement as relating to a different subject matter, the section could be read as affecting the severable portion only of the contract, leaving the balance in operation. However, in this transaction the leases and the licences had a unity, as I have already observed. If the leases and the licences are not severable in the intent of the parties the licences must be ended as well as the leases by force of the statute itself It may well be that this argument is also correct Indeed, it is correct in my view, although it is not necessary for me so to decide. It produces the same result as the argument accepted by the Tribunal. (p13) His Honour also found that Bloomfield had suffered a pecuniary loss and one which was directly attributable to the discharge of the leases by virtue of the operation of s5 of the CAA. The Board by leave appeals to this Court from the judgment of Hamilton AJ. However, it does not persist in contending that the leases were not frustrated. The Board nonetheless submits that Bloomfield has not suffered a pecuniary loss under cl9(2) of the Arrangements. The submission is primarily that, although Bloomfield may have suffered a loss, it is not a 'pecuniary loss' within cl9(2) by reason of the exclusionary provision in cl3. Next, it is submitted that on a proper construction the leases were not discharged by s5 of the CAA at all, but by cl4(2) schedule 2 to the CMAA. Therefore, any loss suffered by Bloomfield was not 'directly attributable' to the operation of s5. Apart from the application of the doctrine of frustration, Bloomfield asserts that its right to access and work the surface was terminated directly by operation of the second part of s5 which had the effect of 'freeing' the coal the subject of the lease. Even if it be held that the right (to access and work the surface) was extinguished by the CMAA or the Regulation, then the CMAA was only enacted 4 UNREPORTED JUDGMENTS as a consequence of the enactment of the CAA and any relevant effect is, for the purpose of cl9(2), directly attributable to s5. It is convenient at this point to set out the principal legislative provisions. THE LEGISLATIVE PROVISIONS S5 of the CAA provides: All coal that, but for this Act, would be vested in: (a) an instrumentality or agency of the Crown; or [1] (b) any person other than the Crown, is vested in the Crown freed and discharged from all trusts. leases, licences. obligations, estates, interests and contracts. Cl9 of the Arrangements is as follows: (1) Any person, other than the Crown or an instrumentality or agency of the Crown, is eligible to make a claim under cl10 or cl11 if: (a) saleable coal was, immediately before the base date, vested in that person; and (b) that coal was situated within a colliery holding at any time during the period beginning with the base date and ending with Ist January 1986. (2) Where a person claims to have sustained pecuniary loss which is directly attributable to the discharge of any trust, lease, licence, obligation, estate, interest or contract by virtue of the operation of s5 of the Coal Acquisition Act 1981, and the loss is not one in respect of which a claim could be made under cl10 or cl11, the person is eligible to make a claim under cl12. Inter alia, cl3(1) defines 'pecuniary loss': in relation to a claim made under cl12, does not include any loss which is attributable to a liability to pay royalties to the Crown in respect of coal which is extracted from a colliery holding on or after the base date, The case also requires consideration of schedule 2 of the CMAA, in particular c12(4) and cl4. These provide: 2(4) A person who, immediately before the appointed day, had a right to mine coal otherwise than pursuant to an authorisation to mine in force under the Principal Act or a coal lease so in force may, subject to the conditions imposed by the Minister, continue on and after that day to mine the coal to which, if the Coal Acquisition Act, 1981, had not been enacted, the right would have related and may so continue until - (a) the Minister otherwise directs by instrument in writing served on that person; or (b) a coal lease is granted in respect of the coal to which the rights conferred by this subclause relate, whichever first occurs. 4(1) To the extent to which any lease, agreement or other instrument in force immediately before the appointed day provided for the payment of rent or royalty in respect of coal other than coal vested in or reserved to the Crown, the lease, agreement or other instrument ceases on and from that day to have any force or effect. (2) Except to the extent provided by subcl(1), a lease, agreement or other instrument referred to in that subclause continues in force on and after the appointed day until - (a) the Minister, by instrument in writing served on the parties to the lease, agreement or other instrument otherwise directs; or WRB COAL COMPENSATION BOARD v NSW COAL COMPENSATION TRIBUNAL (Steii JA) (b) a coal lease is granted in respect of the coal which the lease or other instrument would have related if the Coal Acquisition Act, 1981, had not been enacted, whichever first occurs. ISSUES As the argument developed on the appeal a number of issues arose for consideration. These questions may be conveniently phrased as follows: 1. Did the expiration of cl4(2) leave s5 of the CAA free to operate as and from 30 April 1982 (the date on which the Regulation to the Coal Mining (Amendment) Act, 1981 was gazetted) thereby frustrating or discharging the whole of the leases including rights to use the surface and access to and from it? 2. Whether the deferred loss sustained by Bloomfield is a pecuniary loss within cl19(2) of the Arrangements? 3. Whether the loss is directly attributable to the discharge of the leases by virtue of s5 of the CAA? 4. Does the definition of pecuniary loss in cl3 of the Arrangements, which excludes loss due to liability to pay royalties, also exclude all claims by lessees under private leases? Phrased in this way, I would answer the questions as follows: 1. Yes 2. Yes 4(1) continued in force, except as to payment of rent or royalty in respect of coal. until one of two events occurred. One of these was the grant of a coal lease. By cl6(1) of the Regulation a person who, immediately before | January 1982, had a right to mine coal in a colliery holding was deemed to have been granted a coal lease under the Coal Mining Act, 1973. The regulation was gazetted on 30 April 1982. In my opinion, Broornfield's surface rights survived on 1 January 1982 by reason of cl4 of the savings and transitional provisions in schedule 2 to the CMAA. They continued in force, but only until 30 April 1982 when they ceased to have any force or effect. Therefore, cl4(2) operated as an interim measure between | January and 30 April 1982 to preserve the surface rights. However, the effect of cl4(2) as a savings provision was spent on 30 April 1982. It had no more work to do and was retrospectively superseded by the deemed coal lease and later (on 28 April 1983) by Coal Lease 500 entered into between the Crown and Bloomfield. Neither the deemed coal lease nor Coal Lease 500 carried any surface rights. The operation of cl4(2), having ceased on 30 April 1982, left s5 of the CAA free to operate in a complete and uninhibited fashion on the leases in question or rather on what remained of them, namely the surface rights. Cl4(2) in effect performed a statutory severance. Therefore, s5 had a delayed effect on the surface rights which continued to exist between 1 January and 30 April 1982. However, when the transitional arrangements were swept away by the granting of the deemed coal lease, s5 determined the surface rights. It confirmed the immediate operation of s5 of the CAA on any lease to the extent that it provided for payment of rent or royalty in respect of coal, but otherwise preserved any lease etc until one of two events occurred, as specified in the clause. In other words, the ancillary parts of the lease (concerning surface rights) continued in force after 1 January 1982 and were not 'reinstated' by the clause as submitted by Bloomfield. 6 UNREPORTED JUDGMENTS If it was intended that s5 allow private rights to mine coal and private surface rights to continue unaffected, it is difficult to see the need for cl2 and cl4 of schedule 2 to the CMAA. They would have been unnecessary. The legislative intention is reinforced by the content of s4 CAA (that the Act has effect notwithstanding any other law or instrument etc.) and the contemplation that arrangements for compensation to be made under s6 could extend to rights other than coal ownership. As is plain cl2(4) gave Bloomfield the right to continue to mine coal but said nothing about contractual rights to use the surface. Cl4 however had the effect of keeping the surface rights alive and not discharged until either of the events in cl4(2) occurred. Once such an event occurred, s5 took its full effect and wholly discharged the leases, including the surface rights. The result of this, leaving aside the appellant's other arguments, is that Bloomfield may receive no compensation for loss of surface rights between 1 January and 30 April 1982, because these rights were not lost until 30 April when the leases became wholly discharged. In my view it is wholly artificial to say that the leases were not discharged by s5 but rather by cl(2). The amendments to the CMAA would not have occurred except as a consequence of the CAA and as part of the necessary legislative package relating to the acquisition of coal and payment of compensation. QUESTION 2 From the above it will be clear that the loss suffered by Bloomfield with regard to the surface rights was deferred until 30 April 1982. The question therefore arises whether it is a pecuniary loss within cl(2) of the Arrangements. The first matter which may be adverted to is the proposition of the appellant Board that one needs to have been an owner of coal under cl9(1) to qualify as a claimant under cl9(2). I cannot accept this. Loss, other than in respect of royalties, is still compensable as pecuniary loss, even if royalties would otherwise have formed part of the claimant's loss. The definition of pecuniary loss in cl3(1) merely requires that the Board calculate what part of a claimant's loss is related to loss of surface rights in leases, and eliminate any part which relates to royalties. Leaving this to one side, it is difficult to conceive how it can be said that the fact of deferral of the loss to 30 April 1982, by reason of the savings and transitional provisions, makes any difference. A claim under cl9(2) of the Arrangements is not fixed as at the appointed date or any other particular date. The requirements are rather that the pecuniary loss be one which is directly attributable to be operation of s5 of the CAA. QUESTION 3 This question involves examining the meaning of 'directly attributable'. In a different context Lord Reid examined the meaning of 'attributable' in Central Asbestos Co Ltd v Dodd [1972] All ER 1135. His Lordship said: That means capable of being attributed. 'Attribute' has a number of cognate meanings; you can attribute a quality to a person or thing, you can attribute a product to a source or author, or you can attribute an effect to a cause. The essential element is connection of some kind. (at 1141) In Walsh v Rotter District Council [1978] 1 All ER 510 Donaldson J considered the meaning of 'attributable' in an employment context. After referring to Lord Reid in Central Asbestos he remarked: WEBW COAL COMPENSATION BOARD v NSW COAL COMPENSATION TRIBUNAL (Grové AJA) Suffice it to say that these are plain English words involving some causal connection between the loss of employment and that to which the loss is said to be attributable. However, this connection need not be that of a sole, dominant, direct or proximate cause and effect. (at 514) In my opinion 'directly' in cl9(2) should not be construed to mean solely, which is in effect the submission of the appellant. What is required is a causal connection, but this need not be the sole or even dominant cause. In this instance there is no doubt that there exists a direct causal connection. The loss to Bloomfield was attributable to its need to acquire and pay for new surface rights and this loss was a direct result of the termination of the leases. QUESTION 4 The appellant also submits that the loss suffered by Bloornfield is not a 'pecuniary loss' within cl3(1) of the Arrangements. This argument maintains that the exclusion of any loss attributable to a liability to pay royalties for coal to the Crown also excludes all claims by lessees under private leases. In the circumstances of the particular leases in question, it is apparent that no part of the claim is attributable to a liability to pay royalties to the Crown. C19(2) provides no reason for cutting down the meaning of 'pecuniary loss' beyond excluding any loss attributable to a liability to pay higher royalties to the Crown as specifically excluded by cl3(1). Accordingly, the cl3(1) 'definition' is not relevant. C19(2) of the Arrangements provides for a person who has sustained pecuniary loss to make a claim where the loss is directly attributable to the operation of s5 other than a claim under cl9(1), cl10 and cll1, which concern compensation for former coal owners. There remains a submission based on cl17C of the Arrangements. Cl17C deals with the reduction of compensation by the amount of benefits obtained from the discharge of any trust, lease etc "by virtue of the Coal Acquisition Act, 1981, or from the operation of the Coal Acquisition (Transitional Provisions) Regulation 1982 or cl4 of schedule 2 to the Coal Mining (Amendment) Act 1981' (emphasis added). It was submitted that cll17C acknowledges the differentiation in effect of the discharge of any trust, lease etc whereas s6 of the CAA only enables arrangements for compensation to be payable 'as a result of the enactment of this Act'. As observed earlier, the Regulation and schedule 2 to the CMAA are enactments which are clearly consequent on the CAA so as to give effect to the CAA in an orderly fashion and to provide for a compensation regime. In the end, however, they all refer back to the CAA, and s5 in particular. In my estimation the appeal must fail. The judge was essentially correct in his reasoning and conclusions. I would propose that the appeal be dismissed with the appellant being ordered to pay the costs of the second respondent. The claim should be remitted to the Board to be determined according to law. Handley JA I agree with Stein JA. Grove AJA I agree with Stein JA Appeal dismissed with costs. Counsel for the Appellant: P M Hall QC & J A Needham Solicitors for the Appellant: Michael Burke Solicitors for the Respondent 1: I V Knight, Crown Solicitor 8 UNREPORTED JUDGMENTS Counsel for the Respondent 2: S Austin QC & L V Gyles Solicitors for the Respondent 2: McDonald Johnson