Posted on November 4, 2016

Cuius est solum, eius est usque ad coelum et ad inferos (to whoever the soil belongs, it is theirs all the way to heaven and all the way to hell) is a common principle in property law.   This principle states that the owner of an area of land should own the sky above the land, and all of the ground below it.  Under this principle it could be assumed that the owner would also be in possession of the mines and minerals beneath their land. However, the ownership of mines and minerals can be a complicated one and is one that landowners and developers need to be aware of.

The risks associated with mines and minerals reservation and exceptions first came to public attention as a result of the Land Registration Act 2002, which dictated that overriding interests in properties had to be registered by 12 October 2013. As a result of this, well-publicised “mass land grabs” took place- 73,000 applications were made by landowners, including the Church of England and the Duchy of Cornwall, to register their historic manorial interests in land before the deadline passed.

The main risk associated with mines and minerals being reserved and/or excepted from a title is that any future development on the land could result in a trespass into the said reserved minerals.  This could result in:

  • Compensation for a trespass into the mineral strata
  • An injunction against the development as a result of trespass, preventing works being carried out
  • The owner demanding a percentage of profit or rent from a development once it is completed.

However, just because minerals have been reserved from a title does not necessarily mean that there are any under the ground, or that landowners can be held to ransom by mineral owners. Minerals are substances of “exceptional use, value and character”, and in the case of Coleman v Ibstock Brick Ltd [2008] the Appeal Court ruled that minerals must have fallen in to this definition when the reservation was made in order for a mineral owner to claim trespass as a result of a development. In this case it was ruled that the minerals below the surface were widely found in the local area and could not be ruled as exceptional.  This is worth bearing in mind when considering what to do as a result of the reservation on a title, as if there is nothing of exceptional use, value or character beneath the surface there is little a third party can do to claim compensation.

In view of the complexity of this issue and the potential pitfalls, developers would do well to assess the situation in respect of mineral rights at the very start of a project.

What are the options available to deal with reserved mineral rights?  

A)     Contact the party who owns the reserved rights.

The benefit of this approach is that all risk will be dealt with and removed, however it does give rise to the following issues:

  • Alerts the owners to the fact that they own an interest in the minerals. The ownership of this interest could have been previously unknown to them and as a result an unnecessary and costly situation may ensue.
  •  If an approach to the owner of the minerals is made and there is an unsuccessful outcome it will often not be possible to obtain insurance as the party with the benefit of the rights will have been put on notice.

B)      Take out insurance to cover any claims made for compensation as a result of trespass into the mines and minerals that have been reserved from a title.

There are several benefits to purchasing an insurance policy:

  • Often cheaper than approaching third parties to secure a release of the mineral rights
  • Risk and associated cost of a third party claiming ownership of the minerals is transferred on to the books of the insurer
  • Cost of resolving the issue is limited
  • The process of dealing with any future claims will be in the hands of experts

Insurers have specialist claims teams who regularly deal with these sorts of claims situations- they will be experienced in settling any claims that are made, and they will be able to resolve any issues quickly and effectively for a claimant.

Should you need to discuss a potential issue over mineral rights, please do not hesitate to contact us. Property Insurance Initiatives are experts in the provision of comprehensive and cost effective insurance solutions for legal indemnity issues.

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