The point at issue was whether certain payments under mining
leases were rent payable in respect of any land or easement, within
the meaning of what is now ICTA88/S119 (see
BIM62035).
The company was granted a lease over certain mines, surface
lands and brick-works in consideration of rents. The lease included
the right to work the minerals and lower the surface, without
making any compensation for damages. In addition to various rental
payments, the lease required specific payments for each acre of
coal seam worked which were described
as "
liquidated damages in respect of the overlying
surface belonging to the lessor". The sums were "
payable in lieu of paying compensation for
damage or injury which may be occasioned by subsidence consequent
on the winning working and getting of the demised minerals".
Held that the payments were rent payable in respect of an
easement, within the meaning if what is now ICTA88/S119, and not an
allowable deduction for tax purposes.
Lord Greene, M.R. noted, in the Court of Appeal that:
"
The type of subject-matter in the present case
is this particular type of "easement" within the meaning of this
artificial definition clause. We therefore start with a
subject-matter which, looked at from the strict point of view of
law apart from the wording of this particular Section, involves a
payment, which if analysed, is a commutation of a claim for
damages. So be it. But once the right is an easement within this
highly artificial definition, I cannot see how an annual payment
made in respect of that easement can fail to be a payment in the
nature of rent within the meaning of those words used in this
context."
In the House of Lords, Lord Russell of Killowen noted:
"
The actual words of Sub-section (4)(b)
(now ICTA88/S119 (3)
are not words of art or such as a conveyancer
would use. They are popular in character; they do not suggest the
idea of an easement in the strict legal sense of an incorporeal
hereditament or of an estate or interest in land. The words, in my
opinion, would be satisfied by a merely personal right, privilege
or benefit, so long as it concerns or affects a piece of
land."
