Burmah Oil Co Ltd v Lord Advocate

A lawful exercise of the war prerogative to take or deliberately destroy private property for public defence ordinarily carries a legal duty to compensate. The power extends to necessary action taken before peril becomes immediate. Property taken for use and property taken for destruction are treated alike.

No compensation is payable for battle damage. This comprises destruction in battle or dictated by the necessities of battle and the dispositions of opposing forces. Deliberate long-term strategic or economic denial, unconnected with immediate local fighting, lies outside the exception.

Destruction intended to deny an enemy industrial resources, rather than to affect the local fighting, was therefore compensable on the pleaded facts. Quantum remained for proof and could reflect the likelihood that the property would otherwise have fallen into enemy hands.

Four associated companies owned oil wells, pipelines, refineries, buildings and petroleum stocks in Burma. Acting under British Government directives during the Japanese invasion, military authorities destroyed that property to prevent its industrial resources and facilities from benefiting the enemy.

The companies brought actions against the Lord Advocate under the Crown Suits Act 1857. Lord Kilbrandon, the Lord Ordinary, rejected pleas that their averments were irrelevant and allowed proof before answer. The First Division reversed that decision and dismissed the actions, holding that the destruction fell within an exception for battle damage.

The appeals proceeded on the assumptions that the destruction was a lawful exercise of the royal prerogative, that no applicable statute authorised it or regulated compensation, and that the companies could prove their averments. The central issue was whether the war prerogative created an enforceable right to compensation and, if so, whether the pleaded destruction was non-compensable battle damage.

1. Disposition. By a majority of three to two, Lord Reid, Lord Pearce and Lord Upjohn allowed the companies’ appeals. The First Division’s interlocutors were recalled so far as appealed against, the Lord Ordinary’s interlocutor was restored, and the cases were remitted for proof before answer.
2. Applicable law. Lord Pearce and Lord Upjohn treated the applicable law as the common law of England, because the acts occurred in Burma when it was a British possession and no local statutory provision had been established. Lord Reid considered that the appeal could be decided without finally resolving the choice-of-law issue because no material difference had been shown between English, Scottish and relevant Burmese law.
3. Scope of the prerogative. Per Lord Reid, Lord Pearce and Lord Upjohn, the Crown’s war prerogative permits necessary action for the conduct of war before danger becomes immediate. It is wider than the emergency rights of an individual subject. It remains subject to legislation which covers the same field and imposes conditions upon executive action.
4. General right to compensation. Per Lord Reid, Lord Pearce and Lord Upjohn, the lawful prerogative taking or destruction of private property for the public good ordinarily entails a legal obligation to compensate. Destruction for denial to the enemy is not materially different from taking property for public use. The historical practice of payment, statutory practice and the reasoning in Attorney-General v De Keyser’s Royal Hotel [1920] AC 508 supported that conclusion.
5. Battle-damage exception. Per Lord Reid, the exception includes accidental or deliberate damage caused in fighting and damage dictated by the dispositions of opposing forces. Per Lord Pearce, it covers damage done in battle or for the necessities of battle, including destruction required for an evacuating force’s survival. Lord Upjohn agreed that the exception must remain narrow. Deliberate long-term strategic or economic destruction outside the immediate battle does not enter the exception merely because an enemy advance determines its timing.
6. Application. On the pleaded facts, the installations were destroyed to deny the enemy industrial resources and to assist the general prosecution of the war. They were not destroyed to hamper the enemy’s advance or protect the withdrawing forces. The destruction was therefore outside the battle-damage exception and attracted compensation.
7. Quantum and remaining issues. Lord Reid and Lord Pearce left the measure of compensation for proof. The award need not equal peacetime reinstatement value and might depend upon the value actually lost, including the prospect that the installations would otherwise have fallen into enemy hands. The respondent’s cross-appeals under the Public Authorities Protection Act 1893 were dismissed unanimously.
8. Dissent. Viscount Radcliffe and Lord Hodson would have dismissed the appeals. They considered that the common law had not created an enforceable right to compensation for lawful acts under the war prerogative, or that the destruction was in any event non-compensable wartime or battle damage. They regarded the allocation of compensation for such losses as a matter for Parliament or executive provision.

• House of Lords: In Burmah Oil Co Ltd v Lord Advocate [1965] AC 75, the companies’ appeals were allowed by a majority of three to two. The First Division’s interlocutors were recalled so far as appealed against, and the actions were remitted for proof before answer. The Lord Advocate’s cross-appeals were dismissed.
• First Division of the Court of Session: By interlocutors dated 14 March 1963, the court sustained the pleas to relevancy and dismissed the actions. The House of Lords reversed that disposition.
• Lord Ordinary: Lord Kilbrandon repelled the pleas that the companies’ averments were irrelevant and allowed proof before answer. The House of Lords restored that interlocutor.