Mining lease-Covenant to work according to best and most approved method H. C. OF A Construction. The owners of a piece of coal bearing land demised to lessees for coal mining purposes "the mines seams or strata of coal and fireclay opened and not opened lying under the land." The lessees covenanted, inter alia, that within five years they would sink to a certain depth towards a bed of coal known as the Borehole seam, unless they should sooner find that or another seam of good marketable coal, and from the expiration of the five years would "continuously work and carry on the said coal mine according to the best and most approved method of mining,” and would continue the working of the mine uninterruptedly and with full and unabated vigour, certain stoppages excepted. The lessees sank to the Borehole seam, and found it to be divided by a narrow band of rock called a "morgan" into two portions, the upper about six feet in thickness, consisting of good coal easily worked, and the lower not so easily worked, averaging about twelve inches in thickness, but containing on the average eight inches of marketable coal. The lessees worked out the seam above the "morgan" over a considerable area, and left the part below it untouched, the result being that, though the latter portion could have been worked together with the upper portion at a profit, it was, in the condition in which it was left, for all practical purposes irrecoverable. In an action by the lessors to recover damages for breach of covenant : 1906-1907. SYDNEY, Dec. 13, 14, 18, 19, 20; April 4. Griffith C.J., Isaacs JJ. VOL. IV. 62 H.or. A. 1997. MEREWETHER v. THE SCOTTISH Held, that the covenant was to be interpreted with reference to the subject matter and the local conditions, and did not impose upon the lessees an absolute obligation to take out the whole of the coal in the seam, including the portion below the "morgan," unless under the circumstances that was essential to the working of the mine according to the best and most approved method of mining. Whether or not the system of working actually adopted was in accordance with the covenant was a question of fact depending on the circumstances. If the lessors intended to compel the lessees to take out the whole of the coal in the seam in any event they should have expressly stipulated for it in the lease. Charlesworth v. Watson, (1906) A.C., 14, distinguished. Jegon v. Vivian, L.R. 6 Ch., 742; Aspdin v. Austin, 5 Q. B., 671; and Lewis v. Fothergill, L. R. 5 Ch., 103, considered and applied. Measure of damages for a breach of the covenant considered. Decision of the Supreme Court, Merewether v. The Scottish Australian Mining Co. Ltd., 23 N.S. W. W.N., 106, affirmed. APPEAL from a decision of the Supreme Court. The following statement of the facts is taken from the judgment of Griffith C.J. "This is an action brought by the appellants against the respondents as assignees of two coal mining leases for damages for breaches of covenants contained in the leases. The covenants were set out at length in one of the leases, and incorporated in the other by reference. "By the principal lease the appellants demised to the respondents' assignors for a term of fifty years from the 1st January 1885, all and singular the mines seams or strata of coal and fireclay as well opened as not opened' lying in and under a large area of land in the Newcastle district in New South Wales. At the date of the lease only one seam of coal, known as the 'Burwood' seam, had been opened. The rent payable so long as no other seam had been opened was to be a fixed amount calculated at per acre, which was to be increased as soon as any other seam should be opened. This dead rent was, however, to be regarded as paid on account of a royalty which was to be payable on the coal won from the mine at specified rates. The rate in respect of the period now in question was to be one penny for every shilling 1907. MERE WETHER v. AUSTRALIAN of the then selling or market price of such coal at Newcastle for H. C. OF A. every ton of round or marketable coal wrought and brought to bank, with a like royalty on fireclay. The meaning of the term 'round coal' was defined. The lessees covenanted as follows:'that they the said lessees shall immediately after the execution THE SCOTTISH hereof and at all times continuously during the said term work and carry on the mines under the said lands and the mining operations thereon according to the best and most approved method of mining and uninterruptedly and with full and unabated vigour, suspenses and stoppages as hereinafter mentioned only excepted.' "The lease contained a further covenant by the lessees that within the first five years of the term they would sink one or more pits or shafts to a depth of 400 feet towards a bed of coal called the Borehole' seam (which was well known in the district and was assumed to extend under the demised land), unless they should sooner cut or find that seam or another seam of good marketable coal, and that from and after the expiration of such five years they would continuously work and carry on the said coal mine under the said land according to the best and most approved method of mining' and would carry on and continue the working of the said mine and premises uninterruptedly and with full and unabated vigour during the said term (certain stoppages excepted). The lease contained a proviso that if the mine should fail and be completely and effectually worked out and exhausted and should become incapable of being further worked, and if the lessees should be desirous of giving up possession of the land because of such exhaustion,' they might upon six months notice, given at prescribed dates, terminate the lease. It also contained a stipulation that, if in working the mine a fault or dislocation should be found, the lessees should at their own expense, if required by the lessors, make reasonable trials through the faults or dislocations for the purpose of ascertaining whether the seam so interrupted is workable and marketable' beyond the fault or dislocation, and if the mine or seam shall be found workable and marketable shall at their own expense continue the working thereof. There was a further provision for the determination of MINING CO. LTD. |