24 June 2022
Are the Minerals Mine?
There is a general expectation that a landowner owns the surface land, the airspace and anything beneath the ground, but this could be a costly assumption.
The UK Land Registration Act 2002 defines mines and minerals as “any strata or seam of minerals or substances in or under any land and powers of working and getting any such minerals or substances”.
There are hundreds of minerals, but the most commonly found in the UK are crushed rock, sand and gravel, cement (raw materials), natural gypsum, limestone, brine, silica, gold, coal and oil.
It is a common risk for the title to a property to include a reference to the mines and minerals being reserved to a third party or excluded from the title. These rights can be especially problematic for developers as foundations, or any underground services, could be considered trespass or an interference of the mineral owners’ rights, which could result in the mineral owner taking the following actions:
- The mineral owner could apply for an injunction and/or damages for the trespass
- Payment to release the rights – this can often be a percentage of the developer’s profit
The potential costs of such actions can be seen in court cases such as the Countess of Lonsdale Vs Tesco [2010]. Tesco had purchased a site in Cumbria for GBP 18 million, and the Countess invoked her rights to prevent the development. This action resulted in the seller, Allerdale Borough Council, pulling the sale offer, and consequent significant losses for Tesco.
Mines and Minerals insurance can provide financial protection from these claims; outlined below are the common losses that would be included in this policy
Cover under the policy
- Legal and professional fees
- Damages, compensation, costs and/or expenses awarded against the Insured
- The cost of any out-of-court settlement
- Reduction in market value
- The cost of any demolition or alternation costs required by an order or a settlement
- Sums you have already expended or are contractually obliged to pay which become abortive by a court order
- Delay costs can also be covered for an additional fee
We can even structure policies where there is a known and/or active claimant, providing “catastrophe” cover if a reasonable settlement cannot be reached or the development is injuncted. Or in the event the matter has already gone to court, we are able to cover incoming plot purchaser and their lenders should the courts decide against the developer.
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.