## Facts

- James Livingstone owned a small parcel of land with miners’ cottages on the surface and coal beneath.
- By deed, the coal under his land had not been reserved to a superior; Livingstone therefore owned the coal.
- Livingstone and surrounding mineral interests mistakenly believed the coal had been reserved and was included in a lease held by The Rawyards Coal Company.
- Acting in good faith under this mutual mistake, the company extracted all coal beneath Livingstone’s land.
- The mining caused subsidence and damage to the surface buildings.
- Livingstone sued for (1) compensation for wrongful removal of the coal and (2) compensation for surface damage.

## Issues

1. What is the proper measure of damages for coal wrongfully extracted in complete good faith where the owner could not practically work or market the coal independently?
2. Whether additional damages should be awarded for way-leave and for the advantage gained by working through the owner’s parcel rather than around it.

## Decision

- The House of Lords affirmed the lower court’s damages measure for the coal: a royalty (“lordship”) at the same rate paid for the surrounding coalfield, reflecting the coal’s value to the owner.
- The House upheld a separate award for surface subsidence damage to the cottages.
- The House declined to consider way-leave and “working through” advantage claims because they were not pursued in the intermediate appellate court and could not be revived on further appeal.
- The owner’s appeal seeking a higher award based on coal value less mining costs was dismissed.

## Legal Principles

- Damages are compensatory: the aim is to award a sum that, as nearly as possible, places the injured party in the position they would have occupied absent the wrong.
- The proper measure depends on the claimant’s actual loss in the circumstances, not automatically on the defendant’s gain.
- A defendant’s state of mind matters: good-faith mistaken trespass may warrant allowances and a loss-based measure, while wilful wrongdoing may justify a more stringent approach.
- For wrongful mineral extraction in good faith, where the owner’s only realistic economic use is licensing to the extractor, damages may be measured by the royalty the owner would likely have obtained.
- Physical injury to land (e.g., subsidence) is separately compensable from the value of the minerals taken.

## Conclusion

The court held that where coal was extracted under an honest mutual mistake and the owner could not realistically exploit the coal except by granting a lease, compensatory damages are properly measured by the coal’s royalty value to the owner, with additional recovery for distinct surface damage caused by the mining.


Livingstone v. Rawyards Coal Co., 5 App. Cas. 25 (H.L. 1880)