Who owns the Minerals??

In the case between (1) Alan Coleman (2) Shu Pao Lym and Ibstock Brick Limited the Court of Appeal considered the terms of an exception and reservation contained in a Conveyance dated 24 March 1921 and reapplied the test previously laid down in the cases at Waring -v- Foden (1932) and Earl of Lonsdale -v- A.G. (1982).

The facts of the case are that the area of land affected by the exception and reservation (which was adjacent to a quarry and brickworks) was sold to a wholesale fruit and potato merchant, Mr Hopkinson in the 1921 Conveyance. The geology of the area is that the land lay above a carboniferous strata which comprised both Upper Coal Measures and Magnesian Limestone. The Claimants sought an Order from the Court that they were entitled to the ironstone, fireclay, brickshale and clay which was on and within the land subject to the exception contained in the 1921 Conveyance and the air space created by the extraction of those substances.

The relevant words from the 1921 Conveyance were:

“EXCEPT AND RESERVING …the mines beds and seams of coal and ironstone and other metals and minerals within and under the hereditaments hereby conveyed with all necessary and proper powers rights and easements for searching for winning working getting and carrying away the same by underground workings only including the power to let down the surface whether built upon or not…..”

Ibstock and its predecessors had previously worked brickshale and clay from the land and the issue which was before the first instance Judge and considered by the Court of Appeal was whether brickshale and what was described by expert evidence as “fireclay in the wider sense” were within the expression “other minerals” in the exception and reservation.

Detailed expert evidence was given at the first instance hearing by Mr Geoffrey Marsden FRICS (Chartered Mineral Surveyor) a mining surveyor and former principal lecturer at Sheffield Hallam University on the correct interpretation of the words used in the 1921 exception and reservation. Both the first instance Judge and the Court of Appeal preferred the approach taken by Mr Marsden in considering the terms of the exception and reservation over an unduly technical and prescriptive approach used by the expert called on behalf of the Claimant, and the Court of Appeal consequently held that fireclay in the wider sense was not included in the reservation

What lessons can be learned from the Court of Appeal’s approach in this case;

1.  The Court upheld the previous cases of Waring -v- Foden and Earl of Lonsdale -v- A.G. As such, the case does not change the law from the previously understood position.

2.  However, in giving their judgment, the Court of Appeal provided a  useful review of the previous decisions on the law and the principles to be applied. In particular, the Court cautioned  against taking an overly prescriptive or restrictive construction in the words used. Particularly, construction of an exception and reservation may require a sophisticated factual enquiry into the background, the minerals in question and the district.  Accordingly, the Court of Appeal would be slow to interfere with a judge who has had to take a number of different factors into account (including findings of fact) to reach a conclusion.

3.  The Court reaffirmed the approach to be taken in Earl of Lonsdale -v- A.G. which is that unless the meaning is clear from the four corners of the relevant instrument itself the first duty of the Court in construing a grant of mines and minerals is to try and ascertain what the phrase meant in the vernacular of the “mining world, the commercial world and landowners at the time of the grant”.

4.  In carrying out that task the Court will look to the commercial background of the transaction, whether the particular material which is claimed to be within the exception and reservation meets the test of “exceptionality” as laid down by Lawrence L J in Waring -v- Foden (i.e. substances exceptional in use, in value and in character) . In considering the test of exceptionality, the Court of Appeal said that “all exceptional seems to mean in this context is something special”

5.  The Court also considered the working rights and found these to be a critical element in trying to understand what was intended to be excepted and reserved. Again the Court reaffirmed the approach taken in Earl of Lonsdale -v- A.G. in which the Court referred to an express powers of working as being a potentially “significant pointer” to the meaning of “mineral”.

6.  The Claimants claim that the 1921 Conveyance intended to create a “ransom” or “stand off” whereby the future working of brickshale (and in this case, commercially more importantly, the rights to infill the void space created) and would require a deal to be struck between the owner of the minerals and the surface owner was described by the Court as “fanciful”. In reviewing the authorities, the Court held there was no evidence that it was common place for parties to deliberately negotiate a stand off situation. It does therefore seem that if this argument is advanced in other cases, a Court will be reluctant to find a “stand off” or “ransom” unless there is extremely clear language used showing an intention to create such a stand off.


Contact:

Paul Calladine:-
               Tel:         01270 621304 
               E-mail:   pcalladine@bowcockcuerden.co.uk