The point at issue was whether the company could make an error
or mistake relief claim. It wished to include a deduction in its
accounts for payments made to indemnify it against compensation
claims, by the owners of the surface land, for damages from working
the mine (see
BIM62035).
The company leased a seam of coal and covenanted to indemnify
the lessor against any claims for damages from the surface owners.
The lessor had acquired the seam from the owner of the estate, but
had not been granted any right to let down the surface. The lessor
had agreed to pay the estate owner, or her tenants, compensation
for any damage to the surface lands and buildings due to mine
workings.
The company entered into an agreement with the tenant of the
surface land and was granted full liberty to work the coal,
although such working might cause subsidence, in return for rental
payments. However, the company did not acquire the right to work
the coal without any liability to pay damages.
Held that the payments were rent payable in respect of an
easement, within the meaning of, what is now, ICTA88/S119, and were
not an allowable deduction for tax purposes.
Lord Justice Slesser noted, at page 79:
"
The immunity from action is clearly a benefit,
and, in so far as that action if it were brought would be one for
nuisance in respect of land, it follows that the rent paid is in
respect of benefits over or derived from land within the scope of
the extended definition in Section 21 of the Finance Act,
1934" (now ICTA88/S119).
