Bromley v the Forestry Commission of NSW [2001] NSWCA 34 (5 March 2001)

Last Updated: 16 March 2001

NEW SOUTH WALES COURT OF APPEAL

CITATION: BROMLEY v THE FORESTRY COMMISSION OF NSW [2001] NSWCA 34

FILE NUMBER(S):

40754/99

HEARING DATE(S): 31 January 2001

JUDGMENT DATE: 05/03/2001

PARTIES:

JAMES EDWARD BROMLEY & 2 ORS v THE FORESTRY COMMISSION OF NEW SOUTH WALES

JUDGMENT OF: Mason P Heydon JA Ipp AJA

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): ED 1847/96

LOWER COURT JUDICIAL OFFICER: Bergin J

COUNSEL:

Appellant: A S Martin SC

Respondent: S J Gageler SC

SOLICITORS:

Appellant: Deacon Graham & James

Respondent: Crown Solicitor's Office

CATCHWORDS:

Crown lands - Crown Lease - Crown Lands Consolidation Act 1913 - special condition - Forestry Act 1916 - compensation for damage - royalties paid to Crown on timber removed - whether statutory change abrogated lessee's rights - failure to prove damage - declaratory relief. ND

LEGISLATION CITED:

DECISION:

See par 75 of Judgment

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40754/99

CD 1847/96

MASON P

HEYDON JA

IPP AJA

Monday 5 March 2001

James Edward BROMLEY & 2 Ors v THE FORESTRY COMMISSION OF NEW SOUTH WALES

The appellants have since 1976 been lessees of a Crown lease that had been issued under the Crown Lands Consolidation Act 1913 subject to reservations from sale generally affecting portions thereof. Special Condition (n) of the lease provides that the lessee shall be allowed "compensation to the amount of one-third of any royalty paid to the Crown on timber removed from the forest area, to cover any damage done to his interests in the holding by licensed timber operations".

Since 1986 timber has been removed from the land by persons licensed under the Forestry Act 1916. On removal, royalties were paid to the respondent pursuant to s30A of the Act.

The appellants commenced proceedings in the Equity Division in 1996, failing in their claim that compensation was payable to them pursuant to condition (n). Bergin J held that (1) the timber had been removed from the `forest area' referred to in condition (n); (2) but the lessees' contractual entitlement stemming from condition (n) had been abrogated by necessary implication by the 1989 amendments to the Forestry Act; (3) in any event, since the appellants had not proved any damage had been done to their interests in the Lease it was not appropriate to grant the declaration sought as to their entitlement to such compensation.

In this appeal, the respondent contends that her Honour was incorrect on (1), and in oral submissions advanced an alternative contention that the 1984 amendments to the Forestry Act abrogated any entitlement under condition (n), at least between 1884 and 1989. The appellants challenge her Honour's decision on (2) and (3).

HELD by Mason P (Heydon JA and IppAJA concurring), allowing the appeal:

Special condition (n) is not confined to loss directly stemming from removal of timber, but includes indirect losses. The reference to one-third of the royalties payable does not mean that compensation is charged out of the royalties paid, but simply that it is capped by this upper limit.

The "forest area" within condition (n) did not cease to exist when two reservations "from sale generally" were revoked in 1933 and 1935. The contract embodied in condition (n) was not frustrated or brought to an end.

Parliament may abrogate or vary the contractual promises of the Executive, including those in instruments such as a Crown lease. But Parliament's intention to do so must be "expressed in unequivocal terms incapable of any other meaning". Commonwealth v Hazeldell Pty Ltd [1918] HCA 75; (1918) 25 CLR 552 at 563 (referred). The 1984 scheme as introduced by the Forestry (Amendment) Act 1984 did not abrogate condition (n). The statutory and contractual rights were capable of concurrent exercise, despite possible windfall to the lessee. Wik Peoples v Queensland [1996] HCA 40; (1996) 187 CLR 1 (referred). ChippendalePrinting Co Pty Ltd v Commissioner of Taxation (1996) 62 FCR 347 (distinguished).

Condition (n) and s30E of the current regime introduced by the Forestry (Amendment)Act confer different rights. Condition (n) offers the right of compensation for damage suffered, while s30E offers a share of the fruits of the timber felled. (Stanton v Federal Commissioner of Taxation [1955] HCA 56; (1955) 92 CLR 630 at 641; Harper v Minister for Sea Fisheries [1989] HCA 47; (1989) 168 CLR 314 at 333 (referred). The 1989 scheme does not abrogate rights under condition (n).

In the particular circumstances of the case, the appellants' failure to prove damage did not mean that a declaration regarding entitlement to compensation could not be made.

Heydon JA: Plaintiffs should bring forward the whole of their cases at Trial, not just the first stage of them. Defendants must specifically plead any matter which otherwise may take plaintiff by surprise.

In this case the interests of justice allow the late amendments to be made. However, the present circumstances are very unusual.

ORDERS

1. Grant leave to the appellants to amend the Further Amended Statement of Claim in the form of the Second Further Amended Statement of Claim dated 1 February 2001.

2. Grant leave to the appellants to amend the Notice of Appeal in the form of the Amended Notice of Appeal dated 1 February 2001.

3. Appeal allowed.

4. Order 6 made by Bergin J on 2 September 1999 set aside.

5. Declare that on the proper construction of Special Condition (n) of the Crown Lease 1919/1 ("the Lease") the appellants are and were entitled to be paid by the respondent compensation for any damage done to their interests in the Lease holding by licensed timber operations to the amount of one-third of any royalty paid to the respondent on timber removed from the forest areas of the Lease.

6. Order that the issue whether the appellants have suffered any damage to their interests in the Lease holding by reason of the activities of licensed timber operations and, if so, the amount of any such damage be remitted to the Equity Division for hearing.

7. Respondent to pay the appellants' costs of the appeal.

**************

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40754/99

CD 1847/96

MASON P

HEYDON JA

IPP AJA

Monday 5 March 2001

James Edward BROMLEY & 2 Ors v FORESTRY COMMISSION

OF NEW SOUTH WALES

JUDGMENT

1    MASON P: Since 1976 the appellants have been the lessees of a Crown Lease over 4856 acres of land in the Barrington Tops. The Lease was first issued in 1919 under the Crown Lands Consolidation Act 1913. It was extended to a lease in perpetuity in 1935.

2    Several of the conditions ((g)-(r)) restrict or regulate the removal of timber by the lessee and/or contemplate the removal of timber by third parties licensed to do so by the Forestry Commission. This appeal concerns condition (n) which provides:

The lessee shall be allowed compensation to the amount of one-third of any royalty paid to the Crown on timber removed from the forest area, to cover any damage done to his interests in the holding by licensed timber operations.

3    In 1973 land at Barrington Tops which includes the subject land was proclaimed a State Forest.

4    Since January 1986 timber has been removed by persons licensed under the Forestry Act 1916 and the respondent Forestry Commission has been paid royalties pursuant to s30A of that Act. Section 30A(1) requires the holder of a timber licence, products licence or forest materials licence to pay to the Commission a royalty in respect of the timber, products or forest materials taken in pursuance of the licence. The royalty is to be such amount as the Commission may from time to time determine (s30B).

5    The appellants commenced proceedings in the Equity Division in 1996. They were successful in some of their claims (no longer relevant). However, they failed in the claim that compensation was payable pursuant to condition (n) (see Bromley & Ors v Forestry Commission of New South Wales (1999) NSWSC 791). Bergin J held that:

(1) the timber had been removed from "the forest area" referred to in condition (n) (at [14]-[38]);

(2) but the lessees' contractual entitlement stemming from condition (n) had been abrogated by necessary implication by the 1989 amendments to the Forestry Act (at [39]-[78]);

(3) in any event, since the appellants had not proved that any damage had been done to their interests in the Lease it was not appropriate to grant the declaration sought as to their entitlement to such compensation (at [79]-[92]).

6    The respondent contends that her Honour was wrong on the first point. The appellants challenge her decision on the second and third points. In oral submissions the respondent advanced an alternative contention, that the 1984 amendments to the Forestry Act abrogated any entitlement under condition (n), at least between 1984 and 1989.

Nature and scope of condition (n)

7    Analysis of the particular issues depends upon a proper understanding of the nature and scope of the right conferred by condition (n). What follows is largely non-contentious.

8    The Lease is a statutory interest, but the relationship between the Executive and the lessee is contractual in nature, subject to the usual incidents of a landlord and tenant relationship (O'Keefe v Williams [1910] HCA 40; (1910) 11 CLR 171, Minister for Lands and Forests v McPherson (1991) 22 NSWLR 687).

9    As indicated below, it is now common ground that the right conferred by condition (n) is an entitlement to "compensation ... to cover any damage" in the sense of a right to payment if and only if damage occurs that is of the nature described in the condition.

10    Compensation is for damage done to the lessee's interests in the Crown Lease by licensed timber operations. The licence and its statutory incidents define the nature and extent of activities that may give rise to a right of compensation. However, for the purpose of condition (n) these activities are not confined to the loss stemming directly from the removal of timber. Indeed, it is arguable that the mere abstraction of royalty-bearing timber falls outside the condition once it is understood that, from prior to the commencement of the Forestry Act 1916, there has existed a regime of royalty sharing between the Crown and the holder of tenures such as a Crown lease, such royalties being calculated by reference to quantities of timber removed under licence. In these circumstances, it appears unlikely that the very act generating a right to a share of royalty could itself be a form of "damage" within condition (n). This point was not argued, so it is merely flagged as a possible view of the construction of condition (n).

11    With this possible qualification, the "damage" addressed by condition (n) is not confined to direct disturbance of the physical environment through licensed timber-getting operations. Indirect losses, such as interference with quiet enjoyment or with the exploitation of the farming capacity of the land, are undoubtedly included.

12    The compensation claimable is capped by reference to "the amount of one-third of any royalty paid to the Crown on timber removed from the forest area". As will become apparent later in these reasons, the "forest area" for this Lease means those portions of the land called Reserves 53,072 and 53,073. The capping does not mean that the compensation is payable out of royalties in the sense of being charged upon them. It simply means that a sum equivalent to one-third of the "royalty paid" is the upper limit of compensation claimable. Neither side addressed any submissions as to whether this involves a simple exercise of aggregating royalty paid over a total period and dividing the sum by 3 in order to discover the cap for a compendious compensation claim covering the same period; or whether in some way the capping exercise must be broken up into periods corresponding with the periods (if any) by which royalty is calculable or payable.

The forest areas

13    As in the court below, Mr Gageler SC submitted on behalf of the respondent that there had ceased to be any "forest area" within condition (n) when two portions previously reserved from sale under s29 of the Crown Lands Consolidation Act 1913 (CLC Act) had had such reservations revoked in 1933 and 1935 respectively. If no "forest area" remained, there would be no relevant royalties and the compensation would be capped at nil throughout the entire period from 1935.

14    Section 29 of the CLC Act authorised the Minister by notification in the Gazette to reserve any Crown lands from sale, lease or license. On 15 November 1918 two portions of what in 1919 was to become the area of the Lease were reserved "from sale generally". One portion was to the east (No 53,072) and the other to the west (No 53, 073).

15    Section 85 of the CLC Act when read with the Returned Soldiers Settlement Act 1916 authorised the Minister by notification in the Gazette to set apart Crown lands for disposal to a returned soldier. The areas of land thus set apart were to be subject to any reservations of timber and to such other reservations as the Minister may consider necessary and specify in the gazettal notification (CLC Act, s85(2)).

16    On 15 November 1918 the Crown land that in 1919 became the subject of the Lease was set apart "to be disposed of to a returned soldier exclusively". Reserves Nos 53,072 and 53,073 (which had been created that same day) were declared to be "not affected" by the notification (BB 9, cf CLC Act, s85(4)). The gazettal notification (BB 8-9) stipulated that:

That part of the area which contains timber in excess of the requirements of the lessee as tenant thereof is set apart as a forest area. The forest areas are shown on published litho by black shading.

The shaded areas in the litho (BB 40) were identified as the two portions reserved from sale generally in the gazettal published the same day, ie Reserves 53,072 and 53,073. (At that stage the area was said to be 4680 acres, slightly less than the area of what became the Crown Lease.)

17    The notification setting apart the area acres contained information about how application might be made for the Crown Lease. A successful application culminated in the issue of the subject Lease in 1919.

18    In these circumstances, it is clear that the references to "forest area" in condition (n) and other conditions of the Lease were references to the portions identified as Reserves 53,072 and 53,073, depicted in the litho (BB 40) and described by metes and bounds in the gazettal notification reserving those portions from sale generally (BB 6). So much is common ground.

19    Bergin J also held that the portions thus set apart as a forest area were reserved pursuant to s85(2) of the CLC Act. This conclusion is not challenged by the respondent. Indeed it is embraced.

20    On 22 September 1933 Reservation No 53,073 was revoked, under s30 of the CLC Act (BB 20). Reservation No 53,072 was similarly revoked on 11 January 1935 (BB 33). In each case the gazettal notification referred to the original purpose of the reservation as "from sale generally".

21    The respondent submits that the "forest areas" thereupon ceased to exist. Bergin J rejected this submission. She held that Reservations 53,072 and 53,073 on the one hand and the forest areas on the other hand were reserved separately and respectively under s29 and s85(2) of the CLC Act. She therefore rejected the submission (repeated on appeal) that, because there was an implied reservation of timber pursuant to s85(2) in the notification setting the area of 4680 acres apart for disposal to a returned soldier, it followed that later revocation of that setting apart effectively removed any "forest area" from the subject land for all purposes. I agree with her Honour's reasoning as set out in pars [31]-[35] of her judgment, which need not be repeated herein.

22    I would simply add that, quite apart from s85(2) of the CLC Act, the notification (BB 8-9) and the plan (BB 40) identify as the "forest area" the portions of land reserved for sale generally as Reserves 53,072 and 53,073 without making such identification subject to or dependant on the reservations from sale generally continuing as such. The events of 1933 and 1935 did not frustrate the contract embodied in condition (n) or otherwise bring it to an end. Its subject matter remained capable of identification and implementation by reference to the 1918 documents showing the portions of "forest area" by reference to the two Reserves. All that happened in 1933 and 1935 was the revocation of the respective reservations from sale generally.

Abrogation of condition (n) by amendments to Forestry Act in 1984 and 1989

Bergin J's reasoning

23    In her judgment, Bergin J reviewed the legislative history in relation to the payment of royalties pursuant to the Forestry Act 1916 and the regulations made thereunder. It is convenient to set out pars [43]-[50] and [58]-[64] which deal with the situation between 1916 and 1984:

43 The system whereby compensation could be claimed by lessees of Crown Lands in relation to timber within a Crown lease was first introduced by the Ringbarking on Crown Lands Regulation Act 1881. The lessee was only entitled to make a claim for compensation in respect of ringbarking of trees on the leased land if it was covered by a permission granted by the Minister and it had increased the value of the land to any purchaser. Such compensation was limited to one shilling and threepence per acre (s4).

44 The system for royalty payments to the Crown for timber felled on Crown Lands contained in the Crown Lands Act 1884 required persons licensed to fell timber on Crown Lands and Timber Reserves to pay royalty calculated according to the class of timber felled and/or according to a scale fixed by Regulation. That Act also required the licensee to pay to the Crown what was described as "upset rent" (s115).

45 The first Forestry Act of 1909 provided that the licences of timber getters and other licensees would be subject to the payment of royalty to the Crown (s16(a); s17(3)). The calculation of the royalty at that time was on the log measurement of the timber or as prescribed by the director of Forests. Royalty was to be paid both on timber felled and on products taken from the lands under the Act (s18 & 19).

46 In the 1916 Forestry Act which repealed the 1909 Act s30 provided for the payment of royalties to the Crown for timber and products taken in pursuance of licences issued under the Forestry Act. That royalty was to be fixed by the Forestry Commission but was not to be less than such minimums, if any, as were prescribed by the Regulations (s30).

47 The Regulations to the 1916 Act provided for an apportionment of royalty to be payable to a Crown lessee. That payment was a requirement imposed by a special condition included in special licences under Regulation 46. The special condition required payment by the licensee to the Crown of two-thirds and to the lessee of one-third of the amount of any royalty imposed. That Regulation came into force in June 1917.

48 Regulation 46 was amended in 1920 to include the following proviso:

The payment to the Crown of two-thirds and to the lessee of one-third of the amount of any royalty charged; provided that no payment of part of royalty charged shall be made to the lessee in respect of timber obtained from any such lease or part of such lease situated within a State Forest or Timber Reserve.

49 The Regulation in that form remained unaltered until 1957 when it was amended to provide that the Crown was to be paid 95% and the lessee 5% of the royalties paid to the Crown by the licensees. The terms of the proviso were not amended.

50 In 1972 the Forestry Act 1916 was amended and a system was introduced whereby the Crown lessee became entitled to one-third of royalties paid after the deduction of a prescribed amount. At this time the Regulations were also amended and Regulation 46 was omitted. This system remained in place until 1984 when the Act was further amended.

...

58 Although not specifically addressed in argument before me, it may be argued that the original lessee was disentitled to the compensation under special condition (n) during the period 1920 to 1972 when the prohibition was in place pursuant to regulation 46 preventing any payment of "part of royalty charged..in respect of timber or products obtained" from the lease or any part of the lease situated in a State Forest or Timber Reserve. Alternatively it may be argued that the prohibition was in place to prevent a double payment of royalty and compensation in respect of the same land.

59 I am of the view that the reference in special condition (n) to "the amount of one-third of any royalty" was to fix the maximum compensation that could be paid to a lessee. It was not a payment of royalty. It was a payment of compensation that had been capped at an amount equivalent to one-third of any royalty paid to the Crown in respect of timber removed from the forest area. This amount remained capped at one-third even when the apportionment under Regulation 46 was set at 95% to the Crown and 5% to the lessee between 1957 and 1972.

60 The lessee was not receiving a payment "in respect of timber or products" pursuant to special condition (n). What the lessee was entitled to receive was a payment "to cover any damage done to his interest in the holding by licensed timber operations". The two concepts are quite different. If this were not so it is to be expected that during the period 1957 to 1972 the capping of the compensation would have been reduced to 5% of any royalty paid. This was not done.

61 Royalty payments to Crown lessees have been at the sole discretion of the Crown. The maintenance of the Crown land under Crown leases has contributed to the capacity of the Crown to earn income from licensees in the form of a royalty payment. Those licensees have paid the royalty for the privilege or right under their licences to take the timber or products from the land the subject of the Crown leases. Stanton v FCT [1955] HCA 56; (1955) 92 CLR 630. The Crown lessees shared in that income to whatever extent the Crown, in its sole discretion, decided from time to time.

62 Compensation is a payment of a different kind. It is for recompense for a loss suffered. In the context of real property it provides a replacement in monetary value of property or rights which have been lost or damaged (s126(1) Real Property Act 1900 (NSW)).

63 I see no necessary implication that the contractual entitlement under special condition (n) was lost during the period up to 1972 nor am I satisfied that the necessary implication of this prohibition was to equate a share of royalty with an entitlement to compensation and thus prevent a double payment.

64 There was no such prohibition during the period 1972 to 1984. The plaintiffs were therefore entitled to the share of the one-third of the royalty after the deduction of the prescribed amount in respect of timber and products taken from the land. I am satisfied that the plaintiffs' contractual entitlement to compensation pursuant to special condition (n) could sit quite comfortably with the statutory provisions in respect of the apportionment of royalties during this period. One was an unconditional statutory entitlement to a share of the Crown's royalty income, the other was compensation "to cover damage".

24    The parties did not suggest that this summary overlooks any relevant information or is in any way inaccurate. It is therefore common ground that up to 1984 the lessee's right to enforce condition (n) existed concurrently with the regime of royalty sharing in the Forestry Act and its regulations.

25    According to Bergin J, this changed in 1989 in light of amendments to Part 3 of the Forestry Act 1916. Her Honour said (at [51]-[54], [65]-[78]):

51 In 1984 that part of the Act entitling the lessee to a payment of one-third of the royalty after the deduction of the prescribed amount was repealed. The amending Act set up a compensation fund (s30C) into which was to be paid such part of royalties collected which the Commission determined should be set aside for payment of compensation to Crown lessees.

52 This scheme was set up under a new Division 5 which provided that where timber or products had been removed from the land by timber operators the Commission was to make an assessment of the amount of compensation, if any, payable in respect of "disturbance to the land occasioned by the taking of timber, products or forest materials" (s30K). Under these provisions the Commission was required to take certain matters into account when assessing the compensation to which the Crown lessee was entitled (s30L).

53 Although royalty was still paid to the Crown the lessee had no statutory entitlement to share in that royalty albeit that the source of the funds for the compensation fund was the royalties. The lessee only had an entitlement to have an assessment of compensation made for disturbance to the land in his lease holding.

54 In 1989 the system of apportionment of royalty was re-introduced into the legislation. Section 30E came into force and the former compensation provisions were phased out over a twelve month period (s30K). Section 30L prohibited the payment of compensation and an apportionment of royalty during the same period.

...

65 The present statutory provisions for the apportionment of royalties are similar to the provisions between 1972 and 1984 except the "prescribed amount" to be deducted under the former scheme has been replaced by particular reference to the deduction of certain "cost incurred". The more complex feature of discerning any necessary implication from the introduction of the present system of apportionment is what happened between 1984 and 1989 when the compensation system was introduced and subsequently phased out.

66 The statutory compensation was for "disturbance to the land occasioned by the taking of timber products on and from the land" (s30K(1)&(2)). The assessment of compensation for the "disturbance" required consideration of the effects of the operations carried out on the land for the taking of the timber and products and the construction of roads, bridges, gates and ramps and any incidental works associated with the operations. The consideration of the effects of this construction was irrespective of whether such construction was on the land (s30K(3)).

67 In making the assessment of whether any compensation should be paid the Commission was required to consider "both beneficial and detrimental" effects on the land of these operations and/or construction (s30K(3)).

68 Special condition (n) entitled the lessee to compensation for "damage done to his interest in the holding by licensed timber operations". It did not accommodate a process of reducing or eliminating the compensation payable by taking into account the fact that a bridge was constructed some miles from the land which may have improved the licensees access to the land.

69 The statutory compensation scheme did accommodate such a process. It effectively allowed the Commission to recoup its costs of construction and incidental works associated with the timber, products and forest materials operations by determining that such were beneficial effects on the leased land, setting them off against any detrimental effects and thereby eliminating any liability to pay compensation to the lessee. It could then keep the whole of the royalties paid to it by the licensees. Alternatively it could reduce the amount of royalty payable to the lessee by such a process.

70 The lessees were able to object to the assessment made by the Commission and, if agreement could not be reached, the matter was then referred to the Valuer-General who would review that assessment and make a new assessment. The Valuer-General was also required to take the same matters into consideration that the Commission was required to consider in its assessment (s30L).

71 In 1989 when the statutory provisions constituting the compensation scheme were repealed they were replaced by the present s30E...

72 This section gives recognition to those costs which under the compensation scheme were referable to the "effects (both beneficial and detrimental) on the land". The Commission is not required to determine these costs with reference to any beneficial or detrimental effect to the lessees' land.

73 I have been referred to the Second Reading Speech in the Legislative Assembly on 25 July 1989 in relation to these amendments which in part refers to this aspect of the matter. The Honourable Member for Clarence, Mr Causley the then Minister for Natural Resources, said at p 8470; ...

74 Thus the royalty was given a purpose - that of proper compensation of the lessee for the harvesting activities on the land. For the first time royalty was equated with compensation. The legislation recognised that equation with s30L preventing the payment of compensation and royalty during the same period.

75 It is important to keep in mind that I am not assessing the fairness of the legislative scheme. At this stage I am only dealing with the interpretation of it to discover whether the contractual entitlement to compensation has been lost. The fact that the legislative scheme may deliver an amount less than that which would be payable under the contractual entitlement may be said to be relevant to the decision as to whether the abrogation is necessarily implied. Even if I were to accept such a proposition caution would have to be exercised in relation to it because there is no rule that requires the legislature to act fairly.

76 I am of the view that one of the purposes of the royalty apportionment scheme enacted to replace the compensation scheme is to compensate the lessee for damage done to his interests in the holding by timber operations. Mr Martin submitted that the compensation in special condition (n) is directed to a matter different from the timber operations of licensees who are required to pay royalty. He submitted that it is simply directed to timber removed from forest areas. This submission cannot be sustained in the light of the wording of the special condition which specifically refers to damage done by "licensed timber operations".

77 The legislative scheme for the payment of royalty is for the same compensation as that for which special condition (n) provides. In those circumstances I am of the view that the amendments have the necessary implication that an additional right to compensation for the very same damage could not endure whilst this legislation is in place.

78 I am of the view that the contractual entitlement to compensation under special condition (n) has been abrogated by necessary implication of the 1989 amendments to the Forestry Act 1916.

The legislative framework after 1984

26    As Bergin J points out in the first passage set out above, the regime that existed in varying forms before 1984 provided that persons such as lessees under Crown Leases were to be paid sums equivalent to a portion of royalties paid by the holders of timber licences in respect of timber removed from Crown timber lands (see Forestry Regulations 1917, reg 46 (repealed in 1972), Forestry, Soil Conservation and Other Acts (Amendment) Act 1972, s2(1)(g), inserting a new s30 into the Forestry Act 1916). The scheme in this form came to an end in 1984, although a modified form was to return in 1989.

27    The 1984 scheme (which lasted until 1989) was to be found in ss30C, 30E and Division 5 (ss30J-30M) of the Forestry Act as introduced by the Forestry (Amendment) Act 1984. Section 30C authorised the Forestry Commission to determine to set aside part of royalties for payment of compensation under Division 5 (see also s30E(1)).

28    The keystone of the 1984 regime was s30K. Save for an immaterial amendment in 1987, it provided for a scheme of assessment of "the amount of compensation (if any) payable in respect of disturbance to the land occasioned by the taking of timber, products or forest materials on or from the land in pursuance of the licence" (see s30K(1) and (2)). The assessment of compensation for the "disturbance" required consideration of the effects on the land and on any roads, fences, gates, buildings or works situated on the land, of the operations carried out for the purpose of taking timber, products or forest materials and the construction of roads, bridges, gates and ramps, and any incidental works, associated with the operations (see s30K(3)). In making the assessment, the Commission was required to consider "both beneficial and detrimental" effects on the land of these operations and/or construction work (ibid). The Commission was required to serve notice of its assessment and, subject to review pursuant to objection (see s30L), it was obliged to pay the compensation to the person entitled (see ss30K(6), 30L(8), 30M).

29    These 1984 provisions were repealed in 1989 by the Forestry (Amendment) Act 1989 which commenced operation on 24 November 1989. The crux of the new (and current) regime is to be found in Pt 3 Div 3 (Payment of royalties) (ss30-30H).

30   

Section 30E is critical. It provides:

30E Apportionment of Royalty-Certain Land

(1) This section applies to a royalty payable in respect of timber, products or forest materials taken on or from prescribed land.

(2) When a royalty to which this section applies is paid to the commission the commission is required to pay to the landholder concerned one-third of the balance of the royalty remaining after deduction of the following amounts:

(a) any part of the royalty that is payable pursuant to a determination under s30D (payments to certain organisations),

(b) any costs incurred by the commission in connection with the establishment, planting, maintenance, improvement and protection of the timber, products or forest materials,

(c) any costs incurred by the commission in connection with the facilitation of the taking of the timber, products or forest materials, including the costs of construction and maintenance of roads, bridges, gates, ramps and incidental works,

(3) The costs that are deductable under subs (2)(b) and (c) are to be as determined by the commission.

(4) A share of royalty payable by the commission to a landholder under this section must be paid before the expiration of one month after the end of the financial year of the commission that is current when the royalty concerned is paid to the commission.

(5) Nothing is this Division entitles a landholder to be paid an amount of royalty in respect of the taking of timber, products, or forest materials under a licence held by a the landholder.

31    Also inserted in 1989 was a new Division 5 (s30J-30L) as follows:

Division 5 Savings and transitional provisions

30J Definitions

In this Division:

amending Act means the Forestry (Amendment) Act 1989.

former compensation provisions means the provisions of this Division as in force immediately before their repeal by the amending Act, including any regulations in force for the purposes of those provisions.

30K Phasing-in of royalty apportionment scheme

The former compensation provisions continue to apply in respect of land to which those provisions applied immediately before their repeal, but only so as to enable:

(a) the assessment of compensation in respect of that land on one occasion only after the repeal of the former compensation provisions, and

(b) the payment of any compensation so assessed.

30L Prevention of payment of compensation and royalty apportionment for same period

Section 30E (2) (payment of one-third of royalty to landholder) applies only in respect of a royalty that becomes payable after whichever of the following events is applicable in the particular case:

(a) the repeal of the former compensation provisions if those provisions do not continue to apply to the land concerned under section 30K,

(b) if those provisions do not continue to apply to the land--the first occasion following their repeal on which the commission is required to make an assessment of compensation under those provisions in respect of the land.

32    In his second reading speech, Mr Causley, Minister for Natural Resources, described the 1989 Act as fulfilling a commitment made by the Government to restore to certain holders of Crown timber land a fixed share of the royalties paid to the Forestry Commission in respect of timber, products or forest materials won from that land. He described the legislation as having three essential elements:

first, it will institute a royalty apportionment scheme under which the landholder of certain Crown timber land is entitled to a one-third share of the net royalties paid in respect of the taking of timber and other materials from the land; second it will repeal provisions under which such a landholder is at present compensated for disturbance to the land occasioned by the taking of the timber and other materials; and third, it will provide for the phasing in of the royalty apportionment scheme and the phasing out of the present compensation scheme.

33    Referring to what became s30E, the Minister described the provisions of the Bill as:

...intended to permit the Forestry Commission to offset against a landholder's share of royalties an appropriate part of the expenditure that in fact facilitated payment of the royalty share. Especially in State forest areas, the Forestry Commission expends large sums of money each year on such things as protection from fire and pest, the construction and maintenance of forest roads, bridges and fences, and on silvicultural activities. In practice, the proposed legislation will achieve two things: first, it will guarantee a fixed share of net royalty to the landholder of Crown timber land; and, second, it will permit the recouping of those costs including associated administrative oncosts, incurred by the Forestry Commission in the care, control, management and ultimate harvesting of timber resources.

34    The substantive question in the appeal is whether the lessees' contractual rights under condition (n) were abrogated in whole or in part by amendments to the royalty regime under the Forestry Act effected in 1984 (by the Forestry (Amendment) Act 1984) and/or in 1989 (by the Forestry (Amendment) Act 1989). Bergin J held that this occurred in 1989. The respondent submits that she was correct, but in oral submissions also seeks to rely upon the 1984 provisions as abrogating the contractual right.

The appellants' submissions in outline

35    The appellants have a difficulty stemming from the way the case was run at trial. This issue is discussed later in the judgment. For the present, I shall address the appellants' argument on the substantive point as presented on appeal.

36    This case does not involve any of the issues discussed by Mason J in Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54 at 76-77. The appellants accept that Parliament may abrogate or vary the contractual promises of the Executive, including promises embodied in instruments such a Crown Lease. However, they correctly submit, Parliament must make its intention manifest (Clissold v Perry [1904] HCA 12; (1904) 1 CLR 363 at 373) by express statement or necessary implication. There is a strong presumption against legislative acquisition of property without just compensation. There is no express statement in the legislation under consideration.

37    The appellants submit that the valuable contractual right conferred by condition (n) was not abrogated by the 1984 or 1989 legislative schemes. Specifically it is argued that:

(a) The statutory schemes in all of their manifestations from 1916 to date were and are concerned with the payment to the landholder of a sum equivalent to the stipulated portion of the royalty for timber removed, subject (latterly) to certain defined deductions for the Commission's expenses pursuant to s30E (inserted in 1989). These schemes do not address damage suffered by the lessee.

(b) The essential subject matter of the contractual right is that of "compensation" in the sense of recompense for loss (cf Nelungaloo Pty Ltd v Commonwealth [1947] HCA 58; (1948) 75 CLR 495 at 571) for damage done to the landholder's interest in the Crown Lease. A sum equivalent to one-third of the royalty paid to the Crown caps the compensation claimable, with the consequence that if no royalty is payable then no compensation is payable. But the Crown's royalty entitlement is not otherwise relevant to condition (n). Indeed condition (n) operates with reference to "damage done" generally to the lessee's interests in the holding by licensed timber operations whereas royalties are payable in respect of the timber, products or forest materials taken pursuant to the licence (Forestry Act, s30A).

38    The appellants recognise that the 1984-1989 statutory regime does not fit easily into this analysis, with its reference to "compensation" in respect of "disturbance to the land occasioned by the taking of timber, products or forest materials on or from the land" (s30K during the period 1984-1989). It was nevertheless submitted that the legislation did not abrogate the contractual right.

The respondent's submissions in outline

39    The respondent submitted that Bergin J was correct in concluding that the 1989 scheme evinced a legislative intention that payments thereunder were to be treated as full and adequate compensation to the lessee of a Crown Lease in respect of licensed timber operations. There was in effect a legislative code covering entirely the field of payment to lessees out of royalty to compensate them for the taking of timber under licensed operations. Chippendale Printing Co Pty Ltd v Commissioner of Taxation (1996) 62 FCR 347 was cited as an analogous case of an exhaustive legislative code.

40    Alternatively, the respondent submitted that abrogation occurred in 1984.

Analysis

41    Bergin J appears to have been of the view that the 1984 statutory compensation scheme for "disturbance" was compatible with the contractual regime stemming from condition (n) (see Judgment at [69] and [78] set out above). It was the 1989 legislation that Bergin J held to have abrogated condition (n) by necessary implication (see judgment at [71]-[78], set out above).

42    The nub of her Honour's reasoning was that the royalty apportionment provided for in the current s30E was intended to provide adequate and complete compensation to the lessee for timber harvesting activities on the Crown land. She concluded (in par [78]) that statutory abrogation of the contractual entitlement to compensation under condition (n) occurred in 1989. In these circumstances, it is a little unclear why the appellants' claim relating to the removal of timber since January 1986 failed entirely (cf pars [68]-[69] of the judgment). (I leave aside the issue of loss or damage addressed separately in the later portion of the judgment under appeal.)

43    In my view, the legislative regime existing since 1989 was not incompatible with the contractual right embodied in condition (n) of the Lease so as to abrogate it implicitly.

44    As a valuable contractual right expressed in a lease, the lessee's vested proprietary interest is not subject to acquisition or destruction without compensation unless the legislation is "expressed in unequivocal terms incapable of any other meaning" (Commonwealth v Hazeldell Pty Ltd [1918] HCA 75; (1918) 25 CLR 552 at 563 per Griffith CJ and Rich J). The various formulations of the test for rebuttal are collected by Spigelman CJ in Durham Holdings Pty Ltd v State of New South Wales (1999) 47 NSWLR 340 at 352-4. To these may be added the reference to passages in Wik Peoples v Queensland [1996] HCA 40; (1996) 187 CLR 1 at 185 per Gummow J and 248-9 per Kirby J to which we were referred. Speaking of the extinguishment of subsisting rights by necessary statutory implication as distinct from express legislative provision, Gummow J said that:

The question is whether the respective incidents [of the existing right and the statutory right] are such that the existing right cannot be exercised without abrogating the statutory right. If it cannot, then by necessary implication, the statute extinguishes the right.

45    I cannot see how the right conferred by condition (n) is incapable of exercise without abrogating the statutory right to share in royalties. The 1989 scheme is essentially no different to that which prevailed before 1984, and the parties are agreed that no abrogation occurred then. Amounts were to be deducted from the royalties to recompense the Commission for various costs spent in enabling timber to be won (s30E(2)). But, subject to this recoupment out of gross royalties, one-third of the net sum is to be apportioned to the landholder regardless of the damage (if any) done to the land. This leaves plenty of work for condition (n) to do if and when its requirements were met. It also emphasises the different character of the two rights.

46    The rights conferred by condition (n) and s30E are different in character and vindicate different interests of the landholder. The former offers a right of compensation for damage suffered by the lessee. The latter offers a share of the fruits of the timber felled, because of the nature of a royalty as a payment in respect of that which is taken from the soil (cf Stanton v Federal Commissioner of Taxation [1955] HCA 56; (1955) 92 CLR 630 at 641, Harper v Minister for Sea Fisheries [1989] HCA 47; (1989) 168 CLR 314 at 333).

47    A licensed timber operation may involve cutting a swathe through land in order to gain access to timbered areas such as the "forest area(s)" specified in condition (n) itself. Such activity may generate little or no royalty, albeit that it is a cost to the licensee, or (if incurred by the Commission) a cost to the Commission deductible out of gross royalty pursuant to s30E(2). However, to the extent that damage is done to the lessee's interest, it is compensable under condition (n), subject to the capping proviso.

48    The respondent's submission that the 1989 scheme is an exhaustive code is essentially a circular one. I cannot see any evidence that Parliament intended to occupy the field of condition (n), let alone exclusively. Condition (n) has regard to gross royalties paid, but only for the purpose of capping the compensation right conferred under the Lease. By contrast, the 1989 scheme treats the royalties as the source of the landholder's statutory entitlement and stipulates that the "one-third of the balance of the royalty remaining after deduction" is the "share of royalty payable by the commission". (Although not debated before us, it would appear that the statutory right to deduct various expenses from moneys payable to the landholder (s30D(2)) will not affect the calculation of "royalty paid to the Crown" for condition (n) purposes.)

49    The legislation addressed in Chippendale's Case occupied the same field as the common law right (to recover money paid under mistake of law). It did so subject to conditions and limitations incompatible with an untrammelled common law right (see esp per Tamberlin J at 358-9, per Lehane J at 367-8). This is enough to distinguish Chippendale from the present case.

50    Accordingly, I disagree with Bergin J's conclusion that the legislative scheme for royalty apportionment was for the same compensation as that for which condition (n) provides.

51    Part of her Honour's reasoning (pars [73]-[76], set out above) stemmed from the purpose expressed in the Minister's second reading speech and from implications derived from the transitional provisions of the 1989 scheme, s30L in particular. In my view neither is sufficient to abrogate an outstanding contractual right. The former is at most an explanation of the goals of the 1989 scheme, and one which does not suggest any intention of overreaching the contractual rights of Crown Leases. The transitional provisions in the 1989 legislation go no further than emphasising the compensatory nature of the 1984 scheme, something quite evident from its terms.

52    The situation between 1984 and 1989 (and its impact on the position after 1989) is not so clear.

53    The 1984-1989 regime is described in the transitional provisions of the 1989 amendments as "compensation provisions" (see current ss30J, 30K). Such terminology is apt, in light of the references to

"compensation ... in respect of disturbance to the land occasioned by the taking of timber, products or forest materials on or from the land in pursuance of the licence" in s30K as it stood between 1984 and 1989. The compensation payable was to be determined by the Commission (subject to a right of review) taking into account the beneficial and detrimental effects of the operations and construction work of the type depicted.

54    The purpose of the 1984 scheme was therefore similar to condition (n) of the Lease. And the expressed subject matter of the right was virtually coterminous with the contractual right.

55    Before us, the respondent submitted that the 1984 scheme effectively abrogated the continued operation of condition (n). Such abrogation was said to be permanent, with the result that the repeal of the 1984 scheme did not revive the operation of condition (n).

56    I would reject these submissions. The 1984 scheme covers a wide range of landholdings. It is silent as to provisions such as condition (n). The matters to be factored into the Commission's assessment of compensation for disturbance go beyond the scope of condition (n) in at least two related respects: first the beneficial effects of Commission activities are to be brought to account; secondly, the costs brought into account (extending to the Commission's expenditure on roads, bridges etc) cover works with which condition (n) is not necessarily concerned (eg works off site: see s30K(3)(b)).

57    Applying Gummow J's test in Wik Peoples (par 44 above), the statutory and contractual rights were capable of concurrent exercise, albeit that a windfall might enure to the lessee. Parliament's failure to preclude possible unjust enrichment does not spell common law abrogation of the contractual right. None of this is to deny the capacity of the common law to prevent recovery of double compensation in the event of dual overlapping claims by a lessee (cf Franklins Self Serve Pty Ltd v Wyber [1999] NSWCA 390; (1999) 48 NSWLR 249 at 254, 257-269) but this is not in issue in the present proceedings.

58    Accordingly, I would reject the respondent's contention that the 1984 legislation abrogated the contractual right.

Proof of damage

59    In their pleadings and final submissions in chief at trial, the appellants propounded an extreme interpretation of condition (n). They asserted an entitlement to be paid a sum representing one-third of the royalties received by the Crown regardless of any damage to their interest under the Lease. Consistent with this approach, they tendered no evidence designed to establish that damage had occurred, let alone quantify its extent.

60    The respondent did not plead its alternative interpretation of condition (n) (cf Supreme Court Rules, Pt 15 rr9, 13(2)). It admitted receipt of royalties and that no moneys had been paid to the appellants pursuant to condition (n). And it denied compendiously that its conduct had caused the appellants any loss or damage.

61    In final addresses at trial, counsel for the respondent submitted that the terms of condition (n) did not give the appellants an automatic entitlement to one third of royalty paid to the Crown. He emphasised the reference to "compensation ... to cover any damage" in the clause and he submitted that the condition merely provides an entitlement to recompense for actual loss (Nelungaloo at 571) up to a particular capped amount if and only if there is any damage done to the lessee's interests. He submitted that the appellants had not shown any such damage and that therefore their claim must fail. It was accepted before us that the final addresses were the first occasion that the respondent advanced this interpretation of condition (n). However, the respondent disputed that it bore any responsibility to proffer an alternative construction of condition (n) merely because the appellants propounded an extreme and untenable construction of that condition.

62    In address in reply at trial, the appellants submitted that there was no necessity to prove damage for the declaratory relief then being sought and that quantification could be dealt with at a later time. From the present vantage-point, the latter submission is unclear in its detail and purpose. It may well have struck Bergin J in the same way.

63    The suggestion that quantification of damage should have been deferred may have been a bold and belated attempt to accommodate the real possibility that condition (n) required proof of damage, coupled with an attempt to finesse the dilemma of lack of proof of damage in light of the court's power to sever issues and/or the practice of the Equity Division to order an inquiry as to damages. Alternatively, counsel may have been building the submission upon the limited form of declaratory relief being sought at trial and the recognition that any award of damages would depend in part upon the result of the account of royalties received which the appellants were seeking.

64    Bergin J recorded the respective submissions in her judgment and continued as follows:

81. If I am wrong in the interpretation of the legislative implication of abrogation of the plaintiff's contractual entitlement I am however of the view that any declaration as to entitlement to compensation should not be made until damage has been proved. There has been no damage proved in this case.

65    One may infer from this that her Honour accepted the Commission's proffered interpretation of condition (n). I have already indicated that her Honour was correct to interpret the condition in this way.

66    On appeal, the appellants may not have abandoned their absolute interpretation of condition (n), but they did (for the first time in the proceedings) seek to formulate appropriate remedies stemming from the alternative construction of condition (n) propounded by the respondent and accepted by Bergin J. The prayers for relief were formulated and reformulated in oral argument. We gave leave to the appellants to submit in writing the precise amended form of relief now being sought, without deciding whether it was appropriate to give leave to amend the prayers for relief in the statement of claim and the notice of appeal at this late stage in the proceedings. We heard argument from the respondent on the issue of whether such leave should be granted.

67    The appellants submitted a Second Further Amended Statement of Claim, an Amended Notice of Appeal and Short Minutes of Order. The declaratory relief now sought abandons the absolute view of condition (n), propounds the interpretation advanced by the respondent and accepted by Bergin J, and seeks orders for an inquiry as to damage and an order for payment of appropriate, capped compensation.

68    The issue would be quite academic if Bergin J were correct in her primary determination that condition (n) was entirely abrogated by the amendments to the Forestry Act effected in the 1980s. Since however I disagree with her Honour in this matter, it becomes necessary to deal with the question of remedy.

69    The respondent submitted that, even if condition (n) was not abrogated by statutory implication, nevertheless the appeal should be dismissed because no damage was proved at trial. It was submitted that the orders under appeal can be sustained on the alternative basis of a proper exercise of the discretion to withhold declaratory relief that is futile: this is what Bergin J is said to have done in par [81] of her judgment set out above. The respondents also submitted that it would be contrary to principle to allow the appellants to propound for the first time a new case on appeal having regard to (a) the absence of evidence of damage and (b) the manner in which the trial was conducted. Chilcotin Pty Ltd v Cenelage Pty Ltd [1999] NSWCA 11 was cited.

70    Senior counsel for the respondent accepted that there would be utility in determining by declaratory relief the substantive issue of the durability of condition (n), but he opposed any recasting of the prayers for relief, especially if that would allow the appellants the opportunity to recover compensation with respect to damage occurring between 1986 and the date of filing of the summons in the Equity Division in 1996.

71    In my view this is a case where the interests of justice do not preclude the granting of the remedy belatedly sought in the Court of Appeal. If this Court concludes that Bergin J's decision on the substantive issue is in error, then the question of remedy presents itself squarely for the first time in the proceedings. It is true that the appellants did not tender any evidence of damage because of their blinkered approach at trial to the interpretation of condition (n). However, counsel for the appellants did argue in his address in reply at trial that declaratory relief could issue without proof of damage and that this was a case where quantification of damage could and should be dealt with at a later time (see Judgment par [80]). I think that this was an appropriate stance that could and should have been accommodated by reformulated relief in the event that the substantive point went the appellants' way.

72    Given that these proceedings were heard in the Equity Division and that the relief sought by the appellants included an order that an account be taken of moneys received by the respondent in respect of royalties paid to it, it strikes me as inevitable that, if the alternative and less ambitious claim now propounded had been formulated and properly explored at trial, the issue of quantification of loss and damages would have been deferred pending such account - if only because of the capping provision in condition (n) itself. It was always intended that quantification of the royalties received by the Forestry Commission was to be determined in an inquiry following the determination of the main proceedings (see RB 7Q-W). The ascertainment of such information was a prelude to the making of any order for payment of compensation because of the capping provision in condition (n) itself. A detailed and costly fight over quantification was pointless if condition (n) had been effectively written out of the contract.

73    It is commonplace for computation of complex issues of damages to be deferred, particularly in the Equity Division, albeit that it is strictly necessary for some damage to be conceded or proved before an inquiry as to damages will be ordered. The failure of the appellants to have filed a short affidavit establishing a scintilla of damage was a regrettable oversight, possibly prompted by the belief that a body representing the Crown would not take the hard point. But I am not prepared to infer that they took this course because they accepted that no damage at all was suffered. An alternative way to achieve a similar result, without even proof of damage, would be to order trial of a separate issue under Part 31. The remedy has its difficulties, but may be suitable in a trial where neither party wishes to face up to the detailed issues of damages and where there is utility in determining issues of entitlement. This was such a case, all the more so since condition (n) is not spent and where the parties have not even explored quantification issues.

74    In a proper case, declaratory relief may be granted even if consequential relief is not sought or granted (Supreme Court Act, s75). If the appellants are correct on their substantive point about the durability of condition (n), then there is conceded utility in declaratory relief, albeit that it needs to be reformulated slightly from that sought in the trial pleadings. In the event that a declaration is made in favour of the appellants, then the interests of justice do not compel the withholding of consequential relief that would give the appellants the opportunity to prove the extent of damage actually suffered by them. No limitation point is pressed. The claim is in contract, where damage is not of the gist. The inquiry would be at the appellants' risk as to costs. For reasons stated above, such inquiry depends in part upon the order for an account as to royalties received, which would be granted in the appellants' favour in the appeal if they succeed on the substantive point. The respondent concedes that there is no impediment to the appellants pressing a claim for damages in respect of the period after 1996 if they succeed on the substantive issue. In that event, it seems churlish to deprive the appellants of the right to seek such damages for the period commencing 1986 in light of and notwithstanding the way the matter was fought at trial. I cannot see that the respondent would have conducted its case at trial any differently if the alternative declaration now propounded were advanced at trial: that is because it was never part of the respondent's case to prove the non-existence of actual damage.

75    I propose the following orders:

1. Grant leave to the appellants to amend the Further Amended Statement of Claim in the form of the Second Further amended Statement of Claim dated 1 February 2001.

2. Grant leave to the appellants to amend the Notice of Appeal in the form of the Amended Notice of Appeal dated 1 February 2001.

3. Appeal allowed.

4. Order 6 made by Bergin J on 2 September 1999 set aside.

5. Declare that upon the proper construction of Special Condition (n) of the Crown Lease 1919/1 ("the Lease") the appellants are and were entitled to be paid by the respondent compensation for any damage done to their interests in the Lease holding by licensed timber operations to the amount of one-third of any royalty paid to the respondent on timber removed from the forest areas of the Lease.

6. Order that the issue whether the appellants have suffered any damage to their interests in the Lease holding by reason of the activities of licensed timber operations and, if so, the amount of any such damage be remitted to the Equity Division for hearing.

7. Respondent to pay the appellants' costs of the appeal.

76    HEYDON JA: I agree with the President.

77    So far as Orders 1, 2 and 6 proposed by the President are concerned, ordinarily a plaintiff whose case depends on proof of damage but who has failed either to prove any damage or to have that question reserved for later consideration whether under Part 31 rule 2 of the Supreme Court Rules or otherwise should receive very little encouragement or sympathy on appeal. Trials are occasions on which plaintiffs should bring forward the whole of their cases, not merely the first stage of them. However, the present procedural difficulty was not entirely occasioned by the plaintiffs/appellants. They propounded a construction in paragraph 3 of the Further Amended Statement of Claim which was in terms correct. However, when paragraph 3 is read with paragraph 4, and when account is taken of the failure to plead that any damage was done to their interests in the holding by licensed timber operations, it is apparent that in truth they were contending for a different construction of condition (n) obviating the need to prove that any damage had occurred. Bergin J held, and the plaintiffs/appellants now accept, that that construction is wrong and that the construction propounded below by the defendant/respondent is correct. But that latter construction was not articulated in the Defence.

78    Part 15 rule 13(2)(b) provides that in a defence a defendant is obliged to plead specifically any matter which, if not pleaded specifically, may take the plaintiff by surprise. The construction propounded at trial by the plaintiffs/appellants has been correctly described by the President as "ambitious", and as the result of a "blinkered approach", but it is not so self-evidently irrational, and the construction propounded against it is not so self-evidently correct, that the latter construction could not be said to be one which might have taken the plaintiffs/appellants by surprise. Had it been pleaded, the plaintiffs/appellants would have had an opportunity to review their position and either prove damage at the trial before Bergin J, or reserve their rights to do so at a later time by conventional means.

79    Late though the amendments which the plaintiffs/appellants seek are, and unusual though it is to make an order in effect dividing the trial at the end of an appeal, the interests of justice in these very unusual circumstances justify the proposed Orders 1, 2 and 6.

80    IPP AJA: I agree with the President.

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LAST UPDATED: 14/03/2001