Mines and minerals: a law unto themselves?

Kevin Lee, head of Real Estate Litigation, explores the murky legal landscape surrounding underground mines and minerals, which can have unexpected implications for unsuspecting landowners.

The practitioner purchasing land previously owned by a mining or aggregates company will not be surprised to find that in the original conveyance or transfer from that company, widely-defined mines and minerals are excepted or reserved to the mining company. Somewhat counter-intuitively, there are very often no easements reserved to the vendor company to enter onto the land to work or extract them. 

Branston’s pickle

This was exactly the position in ARC Aggregates Limited v Branston Properties Limited (2020) EWHC176 (Ch). ARC had sold land in Staffordshire by two transfers dated 1988 and 1989, in both cases excepting and reserving to themselves all mines, minerals and mineral substances below the surface of the land, but without the right to work or get the said minerals.

The real purpose of such an exception or reservation in 1989 is not necessarily what the aggregates company may say it was in 2022. Given that mines and minerals “ransom” claims have been a relatively modern phenomenon, it is (arguably) a reasonable proposition that the original purpose of the retention of rights in subterranean mines and minerals was to prevent competition with the aggregate company’s business. It is in effect a permanent protection against the extraction of minerals by future purchasers of the land. 

However, move forward to the 2020s and suddenly the aggregates company will argue that the true purpose of such an exception and reservation was actually to create a horizontal subterranean ransom strip. If any subsequent purchaser of the land sought to exploit the land for development purposes, then it could share in the consequent increase in the value of the land. 

In ARC, the issue was whether the exception and reservation meant that ARC was the freehold owner of the subterranean mines and minerals. If ARC owned the mines and minerals in fee simple, then encroachment by Branston would constitute a trespass. However, if, as Branston argued, they only retained an incorporeal right to the mines and minerals, then any encroachment in the course of creating the foundations for building would not constitute a trespass. 

Old school conveyancers appreciate the distinction between an exception and a reservation. An exception preserves an existing right. A reservation grants back newly created rights. Whether a transfer contains an exception or a reservation depends on the true construction of the contract as a whole.  

Branston relied on the approach of HM Land Registry (Practice Guide 65), which treats the preservation of the lord of the manor’s pre-existing rights to mines and minerals beneath former copyhold land under section 128 of the Law of Property Act 1922 as a reservation, creating an incorporeal right that benefits the lord of the manor and burdens the newly acquired freehold estate of the former copyholder.

Mr Justice Zacaroli disagreed. The language used by the draftsman (“except and reserved”) could not be ignored. In the context of the document as a whole, the minerals were the subject of an exception. As a result, Zacaroli held the minerals company was entitled to summary judgment on its claim for a declaration that it was the freehold owner of the strata of minerals. However, he refused to grant summary judgment on its claim for an injunction to restrain Branston from interfering with the minerals and damages for trespass and conversion. That was a matter which would have to go to trial. 

Branston did seek permission to appeal. However, the case settled before it reached a hearing. 

No [mud]stone unturned

For those of us who have spent a lot of time over the last few years defending (often ridiculous) claims by lords of the manor seeking to exploit their historic title to mines and minerals, the case of Wynne-Finch v Natural Resources Body for Wales [2021] EWCA Civ 1473 has been a delight. 

Lords of the manor generally derive title to mines and minerals through two means.

The first is by way of reservations on the conversion of copyhold land to freehold. Historically, the lord of the manor retained various rights in copyhold land, including the right to any mines and minerals under the surface. The 1922 Act abolished copyhold tenure and converted all remaining copyhold land to freehold status. The twelfth schedule to the Act provided that enfranchisement by virtue of the Act shall not affect any existing right of the lord or tenant in any mines or minerals.

The second is by way of the preservation of rights under an Inclosure (sometimes spelt Enclosure) Act. Over 5,000 Inclosure Acts were passed between 1600-1914 and more than 6.8 million acres of common land was enclosed and then divided amongst local landowners, often the lord of the manor, whose rights to any mines and minerals under the land was preserved. The Church Commissioners, as successor to the Bishop of Durham, often claim title in this way.

In 2020, the High Court heard a claim by trustees whose case was that large parcels of land owned by the defendant public body formed part of the ancient manors of Atwystli or Cyfeiliog in Wales. Under a series of Enclosure Acts the surface of the land had been disposed of, with the historic manorial rights to mines and minerals (“All mines beds and quarries of coal and ironstone and all other metals stone and minerals within and under the hereditaments and premises… conveyed”) retained by the lord, of which they were the successor. The defendant had dug out and used mudstone for various building works. The claimants claimed this was a trespass and they sought an injunction and damages. So, was mudstone a mineral that was owned by the claimants?

Mrs Justice Falk said no it wasn’t and dismissed the claim after a 7-day trial, and the Court of Appeal agreed with her. She found that mudstone was not a mineral and was not saved by the use of the word “stone” in the reservation. She said:

“Quite apart from being ubiquitous in the area, it has one of the lowest values for any rock… Its character does make it suitable for forest roads and tracks, but that cannot make it “exceptional” in any meaningful sense.”

Much of the claimants’ case rested on two propositions. 

First, “stone” means “stone”. The language of the reservation was clear and unambiguous, and it was therefore the duty of the court to give effect to it, as per Rainy Sky SA v Kookmin Bank [2011] UKSC 50, where Lord Clarke said: “Where the parties have used unambiguous language, the court must apply it.” The basic steps in the argument could hardly be simpler, said the claimants.  Mudstone is undeniably a form of stone. The reservation extends to “all other… stone… within and under” the property conveyed. Accordingly, mudstone must be included in the reservation. 

The second proposition was founded on what has, hitherto, been an unhelpful judgement in Earl of Rosse -v- Wainman (1845) 14 Meeson and Welsby 859, which said that anything dug out of the ground fell within the term “minerals”, given that the purpose of the Enclosure Act was to give the surface for cultivation and leave whatever was below for the lord. 

In dismissing the appeal, the Court of Appeal re-affirmed a number of key tests and a number of useful reminders can be taken.

First, the true construction of the reservation is the starting point. However, it is also important to have regard to what Lord Clarke said in Rainy Sky about context and having regard “to all the relevant surrounding circumstances.”

In terms of the construction issue, Henderson LJ said: 

“In the light of these principles derived from cases of high authority, it would in my view be surprising if the word “stone” were to stand out in the present case, as if stranded on an island of literal interpretation, surrounded as it is by words of such notoriously indeterminate meaning as “mines” and “minerals”.

In other words, “stone” does not mean every word that has the letters “stone” within it. 

Second, not everything under the surface is a mineral. The exceptionality test in Waring -v- Foden (1932) 1Ch 276 remains paramount:

“The word “minerals” when found in a reservation out of a grant of land means substances exceptional in use, in value and in character ….. and does not mean the ordinary soil of the district which if reserved would practically swallow up the grant…  and …. that in deciding whether or not in a particular case exceptional substances are “minerals” the true test is what that word means in the vernacular of the mining world, the commercial world and landowners at the time of the grant, and whether the particular substance was so regarded as a mineral.”

Third, the trial judge had referred to the “purpose of profit test”, described in earlier cases as being “an excellent rule of construction, founded on a long series of cases” and that the test imported “that the material has some value that makes commercialisation possible”.

So, the claim and appeal failed. Anecdotally the claimant spent millions on the claim.

The writer has been waiting for a lord of the manor to bring such as case as this. Whilst not as high as maybe 4 or 5 years ago, the volume of letters before action suggesting that petrol stations, supermarkets, houses etc, even if being built on pre-existing developed land, will constitute a trespass into preserved manorial rights to mines and minerals, remains a thorn in the side of developers.  Ransom payments have been made by uninsured developers just to make these unmeritorious claims go away. This judgment gives some valuable support to those seeking to see those claims off. 

An earlier version of this article appeared in Estates Gazette.