Star Energy UK Onshore Ltd & Anor v Bocardo SA

I have no doubt that Accursius’ maxim, or brocard, (Footnote: ⁷⁷) “cuius est solum eius esse usque ad coelum et ad inferos” is not part of English law. As Lord Wilberforce stated somewhat tartly in Commissioner for Railways v Valuer General, (Footnote: ⁷⁸) its use, “whether with reference to mineral rights, or trespass in the air space by projections, animals or wires, is imprecise and it is mainly serviceable as dispensing with analysis”. If that is correct, then, in the absence of any complications concerning deposits of gold, silver, saltpetre and petroleum, it is necessary to ask: what is the general rule at common law about the ownership of the substrata beneath the surface of land of which A is the registered freehold proprietor? I think that the law is as stated by the Court of Appeal in Mitchell v Mosley, (Footnote: ⁷⁹) but shorn of its references to Accursius’ maxim. In short, the registered freehold proprietor of the surface will also be the owner of strata beneath the surface of his land, including minerals, unless there has been some express or implied alienation of the whole or a particular part of the strata to another.

In this case it is not suggested that there is, or was at any relevant point, any other entity with the right to claim title to the strata beneath the Oxted estate, apart from any petroleum deposits situated there. In my view, Bocardo’s title certainly extends to the strata (other than the petroleum) to be found at the depth of the pipes PW5, PW8 and PW9 at 2800 feet below the surface of the Oxted estate. Precisely how much further into the earth’s crust that ownership may go is a question that I need not decide; but if ownership carries on to the centre of the earth, landowners all have a lot of neighbours.

In my opinion it is not helpful to try and make analogies between the rights of an owner of land with regard to the airspace above it and the rights of the landowner with regard to the strata beneath the surface. First, there are many potential users of the airspace above land, whereas, generally speaking, the general public has no right to use or go into substrata beneath someone else’s land. Secondly, the use of airspace above land is highly regulated by statutes and regulations concerning aviation, which have to take account of the actual and potential rights and duties of many others apart from those with a proprietary interest in the surface land. There is no such equivalent regime for strata beneath the surface.

Therefore, like the judge, (Footnote: ⁸⁰) I would answer the first of the property law questions in favour of Bocardo.

I appreciate that this title conflates the second and third issues I have set out above. But it seems to me that these questions have to be taken together because they both revolve around the provisions of the 1934 and 1966 Acts and the licence.

As I have already noted, it is common ground that the tort of trespass is committed when a person, A, commits an unjustified intrusion upon land in the possession of another, B. The essence of the action is that B’s possession of his land suffers an intrusion. It is also common ground that if an intrusion by A, upon the land of B is justifiable, then there is a defence to an action for trespass.

The concept of possession, for the purposes of the tort of trespass, consists of two elements; physical or factual possession and the intention to possess: see JA Pye (Oxford) Ltd v Graham. (Footnote: ⁸¹). Those elements were considered in detail by Slade J, in Powell v McFarlane, (Footnote: ⁸²)in what Lord Browne – Wilkinson described subsequently (Footnote: ⁸³) as a “remarkable judgment”. In Powell v McFarlane, Slade J had to construe the meaning of the expression “adverse possession” in the context of the Limitation Acts. He started by examining what is meant by the common law concept of possession. He said, on the issue of physical or factual possession, that:

“…factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] (Footnote: ⁸⁴) possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances…but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in questions as an occupying owner might have been expected to deal with it and that no one else has done so.” (Footnote: ⁸⁵)

Slade J also dealt with the position of the owner of the land with paper title. He said: (Footnote: ⁸⁶) “In the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land, as being the person with the prima facie right to possession”. As for the intention to possess, Slade J characterised this requirement as being: “…[an] intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the process of the law will allow”. (Footnote: ⁸⁷)These formulations were all approved in Pye’s case. (Footnote: ⁸⁸)

It follows from this analysis that, in the case of the owner of the land with paper title, he must be “deemed” to have exclusive physical possession and the requisite intent to possess the strata beneath the surface to the land he owns, because, in the absence of evidence to the contrary, he has the prima facie right to have such possession of those strata. But it seems to me that these statements do not take one very far once questions about the exclusive physical possession of land (or strata beneath the surface) and intention to possess arise. In the present case it is difficult to say that Bocardo has actual possession of the strata beneath the Oxted estate. It has done nothing to reduce those strata into its actual possession.

Mr Gaunt takes this point. He answers it by saying that the tort of trespass is also committed when there is an interference with the right to possession of land. Because Bocardo is the paper owner of the land and therefore the substrata, it has the right to possession of the substrata. This is so even if it has not reduced the substrata to actual physical possession by carrying out any work in them or signifying possession in some other way. Mr Gaunt relies onstatements of Scott J in Anchor Brewhouse Developments Ltd v Berkley House (Docklands Developments) Ltd. (Footnote: ⁸⁹) In that case the claimant was developing land on its site in London, south of the Thames. The defendants owned adjacent sites which they were also developing. The arms of cranes erected on the defendants’ land “oversailed” the claimant’s land. The claimant asserted that this oversailing constituted trespass and claimed a permanent injunction. The defendants denied that the oversailing was a trespass. Scott J granted an injunction. He recognised that an owner of land cannot easily be said to have actual physical possession of the airspace above it, even if it is the paper title “owner” of it. But he held that a landowner is entitled to possession of the airspace above the surface of his land and is entitled to put structures on that land, thereby reducing the airspace to actual possession. However, if “…an adjoining owner places a structure on his (the adjoining owner’s) land that overhangs his neighbour’s land, he thereby takes into his possession air space to which his neighbour is entitled. That, in my judgment, is trespass…”. (Footnote: ⁹⁰)

I have some difficulty with the proposition that the jib of a crane, placed on one plot of land, “takes possession” of airspace over the adjacent plot of land if it “oversails” that land. But in any event I think that the Anchor Brewhouse case is not very helpful in the present context, for two reasons. First, as with the question of ownership of substrata, it is better not to try and draw analogies with cases concerning the “possession” or “right to possession” of airspace. Secondly, the right to the possession of airspace is circumscribed by statute, not least the Civil Aviation Act 1982. Section 76 of that Act deals specifically with the question of trespass by aircraft.

So I return to the facts of this case. On the face of things, Bocardo is the paper title owner to the strata and all within it (other than any gold, silver, saltpetre and the petroleum). Subject to arguments about the effect of the 1934 Act, it has the prima facie right to possession of those strata, so is deemed to be in factual possession of them. On the face of things, therefore, any intrusion into those strata is an interference with the possessory rights of Bocardo and so is a trespass. There are, it seems to me, only two ways thatStar can avoid that conclusion. First, if it can show that there is some common law principle by which a party entitled to recover minerals from a particular area beneath the surface is also entitled to create and use a passage (at depth) through the land belonging to another to get at and recover those minerals. Alternatively, by establishing that the effect of sections 1(1) and 2(1) of the 1934 Act “justifies” what would otherwise be a trespass by Star by boring and using pipelines at depth through land owned by Bocardo. Mr Driscoll submits that both propositions can be established.

First, the common law issue: the 1934 Act and the 1923 Act (to which it refers on the issue of “ancillary rights”) were passed against the background of the common law rights of landowners and mineral owners to get at and exploit minerals, particularly coal, beneath the surface. Was there a principle at common law, (and if so why), whereby a person (A) who owned or was entitled to work minerals subjacent to the land owned by another (B), had some kind of right, as against B to construct an underground tunnel under the land of B to get to the minerals, although the actual entrance to the tunnel was on land owned by A, or even C? As I read the cases, the answer is that the common law gave A the right to do so in certain circumstances, even in the absence of an express agreement between A and B.

This seems clear from statements of the Court of Appeal in Re an Arbitration between Lord Gerard and London and North Western Railway Company, (Footnote: ⁹¹)on which Mr Driscoll relied. Lord Esher stated:

“At common law, where, by agreement, the upper portion of land is sold, the mines being reserved, without any express stipulation, I think a necessary implication arises in favour of the mine-owner that, if he cannot get the coal otherwise, he may, working in a reasonable way, bore through the upper land which is sold to get at the mine.”

Rigby LJ said:

“…where an owner has sold the surface, reserving the mines, the implication even at common law would be that, if the circumstances of the case rendered it proper, the mine – owner might sink a shaft through the surface for the purpose of getting at the minerals….The law is that, where there is an exception of minerals, there is a right, if necessary, to use the ordinary and proper means of working in order to get the minerals excepted, even although it may involve interference with the land sold.”

Halsbury’s Laws of England, “Mines, Minerals and Quarries”, (Footnote: ⁹²)states:

“If minerals cannot be got otherwise, the owner or lessee of the minerals may bore in a reasonable way through the lessor’s land and minerals not included in the demise in order to reach them, and it does not matter whether the barrier is horizontal or vertical”. (Footnote: ⁹³)

In my view the decision of Jessel MR in Eardley v Granville (Footnote: ⁹⁴)on which Mr Gaunt relied, is actually to the same effect. The facts of the case are complicated and I will not set them all out. The key points, which I have simplified for present purposes, are as follows: the defendant, the Earl Granville, was a lessee under the Crown (in right of the Duchy of Lancaster) of collieries, mines and minerals under lands of which the Crown was lord of the manor near Newcastle – under – Lyne. The plaintiff was the copyholder of part of that manor. Adjacent to the plaintiff’s copyhold land was freehold land owned by Mr Sneyd. He leased mines beneath his land to another, who sub-leased them to the defendant (Earl Granville), who worked that mine, called the “Sneyd mine”. The defendant was also the lessee, from the Crown, of the manorial collieries, mines and minerals beneath the manor of which the plaintiff was the copyholder. There was an underground road, or “crut”, which ran from a deep pit, outside the plaintiff’s copyhold land, then under the plaintiff’s copyhold land (of which the Crown was lord of the manor) and then under the land owned by Mr Sneyd, where, as I have said, the defendant had a lease of the collieries, mines and minerals. The defendant used that underground road to convey coal dug from the Sneyd mine to the deep pit. By his bill in equity, the plaintiff sought, amongst other things, an injunction to prevent the defendant from conveying coals from the Sneyd mine to the deep pit along the underground road.

Jessel MR granted an injunction. He pointed out that where land is held in copyhold, the lord of the manor owns the minerals beneath it, but the copyholder has possession of them. Once the minerals have been extracted, the copyholder has possession of the “space” that is thereby created. The lord of the manor, or his lessee, is entitled to use that “space” for a purpose that is connected with the extraction of minerals within the copyhold lands (assuming that there is an agreement with the copyholder/owner to permit that), but not for any other purpose. Any other purpose would, in the absence of agreement, constitute a trespass. Therefore, the defendant had no right to use the underground passage to carry coal from the Sneyd mine; what Jessel MR described as “foreign coal”. An injunction would restrain Earl Granville from using the underground road for that purpose. However, most importantly, the injunction did not extend to carrying Crown minerals on it: “It is not trespass when carrying Crown minerals”. (Footnote: ⁹⁵)Therefore, as I read Jessel MR’s judgment, he is confirming that if a person has a right to extract minerals from within an area of which another has possession of “non – mineral” space (ie. the underground way in that case), then he commits no trespass when he uses “non – mineral” space for that purpose. That is consistent with the subsequent decision in Lord Gerard’s case.

Although the judges in those cases do not expressly say so, it seems to me that the principle of law which they invoke to give the right of the relevant person to get access to the minerals in strata which he owns or has leased must be the principle of non – derogation from grant. A person who sells or lets land, knowing that the purchaser intends to use it for a particular purpose, may not do anything to hamper the use of the purchaser’s or lessee’s land for the purpose which both parties contemplated at the time of the transaction.The principle binds successors in title to the vendor or lessor. (Footnote: ⁹⁶)

The same principle cannot apply directly to the present case, because, although the Crown owns any petroleum existing in the strata where it is to be naturally found and, can, effectively, “sell” it to a licensee, the Crown does not own the surrounding strata; a third party, Bocardo, does so. The Crown has not sold to a licensee the right to search and bore for and get petroleum from within land owned by the Crown. Therefore, I must reject the submission of Mr Driscoll that there is some right, analogous to the common law right, which entitles Star to have access to the petroleum through the surrounding strata, even if this would involve no unreasonable interference with the rights of anyone else.

That leaves the second possibility, viz. that sections 1(1) and 2(1) of the 1934 Act, taken together with sections 3(1) and 10(3) give some right or justification for the intrusion, at depth, within Bocardo’s land.The question is whether, together, they preclude Bocardo from suing Star, as licensee under the 1934 Act, in trespass, if it bores or uses pipelines at depth, through strata owned by Bocardo, for the sole purpose of searching for and getting petroleum in the licenced area; and does so without causing “one iota” of interference to Bocardo’s use or enjoyment of its land? Before the judge, counsel for Star (not Mr Driscoll) had conceded that, as a matter of law, the effect of the licence from the Crown did not entitle Star to extract the petroleum from the reservoir and get it through the strata above the reservoir. That concession of law was withdrawn before us; being a concession of law, we could not be bound by it anyway.

I start from the position Bocardo would have been in apart from the 1934 Act. Apart from section 1(1), it must be highly arguable that Bocardo would have owned the petroleum lying beneath the surface of its land. Furthermore, apart from section 1(1) of the Act, it must also be highly arguable that Bocardo would have had the exclusive right (as landowner) to search, bore for and get any petroleum under its land, just as a landowner could extract coal found beneath its land. (I accept that these two propositions are subject to the question of whether, at common law, petroleum would have been treated in the same way as coal or as water). But section 1(1) of the 1934 Act declares that the petroleum belongs to the Crown, not the paper title owner of the land in which it is to be found. Moreover, sections 1(1) and 2(1) of the Act take away any rights that the landowner may have had to search, bore for and get petroleum beneath its land and instead give the Crown or its licensee the exclusive right to do those things.

Mr Driscoll argues that the effect of these provisions is that the owner of the strata within which the petroleum is to be found has suffered a curtailment of its rights of exclusive possession of its land. The effect is said to be analogous to the owner (or lessee) of land (A) granting another (B), a limited right to enter onto (or beneath) land for limited, defined purposes. The right can be implied (as in Earl Granville’s case), so that, in respect of the particular limited purposes only, no trespass is committed. In that case, the copyholder of the land did not have exclusive factual possession of the strata beneath his land because Earl Granville was entitled to use it to transport Crown coal.

But this argument by analogy then prompts the question: is this consistent with the provisions of the structure of the Act as a whole and in particular section 3(1) concerning ‘ancillary rights” and section 10(3)? Any rights enabling a licensee under the 1934 Act to intrude into strata beneath the land owned by another could only be granted by virtue of the effect of sections 1(1) and 2(1) of the Act. However, they do not positively give a licensee that right. They only declare the three things mentioned above: the Crown’s ownership of the petroleum; the Crown’s exclusive right to search, bore for and get that petroleum; and the Crown’s exclusive right to grant licences to others to do those things.

I confess I have found the question of the effect of the 1934 Act a very difficult one and I have altered my view as to its effect more than once. But, ultimately, and (I confess with some reluctance), I have concluded that it is impossible to say that the 1934 Act, when read with the 1923 Act and the existing common law, grants a licensee under the 1934 Act the express or implied right to bore pipelines at depth through the land of another within the licensed area in the absence of agreement or the grant of an “ancillary right” under that Act, even where this will not interfere with that land “one iota”.

My reasoning is as follows: first, there is no express right in the 1934 Act which permits the boring of a pipeline at depth through land within the licensed area, in pursuance of the licence. Secondly, section 3(1) expressly acknowledges that a licensee under the Act may need to acquire “ancillary rights” to exercise the rights granted by the licence given to it. One of the types of “ancillary right” expressly contemplated is the “right to enter upon land and to sink boreholes therein for the purpose of searching for and getting petroleum…”. I have concluded that the phrase “enter upon land” is intentionally general and must embrace land within the licensed area. (Footnote: ⁹⁷) Moreover, I think that Mr Gaunt is correct in submitting that the phrase is broad enough to include entering into land beneath the surface. (Footnote: ⁹⁸)

Thirdly, confirmation that the kind of “ancillary rights” that might be required includes “ancillary rights” for use of land beneath the surface is found in the description of the types of “ancillary rights” in section 3(2)(b) of the 1923 Act, which includes a “right of…underground wayleave”. That phrase is, in my view, broad enough to encompass a right to bore a pipe through strata as well as create and use a passage to get to and carry minerals such as coal.

Fourthly, there is the wording of section 10(3) of the 1934 Act. The section was clearly intended to protect the rights of landowners where petroleum might be found, whose rights might otherwise have been adversely affected by the grant of licences pursuant to section 2(1) of the Act. (Footnote: ⁹⁹) I take the wording of section 10(3) to mean that if a licensee has a right (by agreement, the common law, or some other statute) to “enter on or interfere with land”, the licensee can continue to do so. Furthermore, it can do so by exercising rights expressly provided for by the 1934 Act, that is, by acquiring an “ancillary right”. But, apart from those rights, no other right is conferred by the Act on a licensee and the Crown cannot by licence confer any other right on a licensee to “enter on or interfere with land”. To my mind, the words “enter on….land” in that section must include entering on land at depth. I would be prepared to give “interfere with land” a practical meaning, such as having some deleterious effect upon the land or its use by the landowner, but that does not assist Star in this case, because it has entered upon Bocardo’s land at depth.

This means that Star have trespassed on Bocardo’s land. I reach this conclusion with reluctance on the facts of the present case. First, because, as the judge found, this trespass did not affect Bocardo’s use or enjoyment of the land “one iota”. Secondly, the boring and use of the pipelines to extract the oil did not impinge on any rights that Bocardo had previously had. It had no rights to the oil or to search, bore for or get it. Thirdly, the fact that there is a trespass has resulted in expensive and protracted litigation on the issue of damages, whereas, for reasons I shall give in the next section of this judgment, Bocardo will gain virtually no economic benefit at all.

It may be that part of the problem is that when the 1934 Act was passed, “deviated drilling” was unknown. One can think of even more extreme cases. Imagine (as was the fact in the BP v Ryder case) that, within the licensed area, there are many owners of the surface land, eg, within a town, underneath which lies a large deposit of petroleum in its natural state, with the apex of the oilfield directly under the centre of the town. In order to minimise disruption to the urban environment, the well head is situated out of town and the licensee drills from there in a “deviated” way to the apex of the oilfield, which is, say, at 2800 feet under the surface. This means boring beneath many houses or back gardens, at considerable depth, to get from well-head to the apex of the oilfield. I will assume, as in the present case, that the owners’ land and their enjoyment of it is not affected “one iota”. My conclusion means that, in the absence of agreement with each landowner, an “ancillary right” to bore beneath each house owner is needed and each householder would be entitled to some form of compensation under section 8(2) of the 1966 Act. Private arrangements with so many landowners would be impractical, so the licensee would have to apply to the court under sections 1 and 3(2) of the 1966 Act. Doubtless the process would be long and costly and for no one’s benefit other than the lawyers, unless substantial compensation, pursuant to section 8(2) of the 1966 Act, was be shared between the numerous owners of the town. But, as I say, for reasons I will explain below, my conclusion is that the compensation payable for the construction of a pipeline at depth through an area licensed under the 1934 Act would be very small indeed if there is no interference (in any practical sense) with the land through which the pipe is bored.

The judge arrived at the same conclusion, although, I think, by a slightly different route. The essence of the judge’s reasoning is that because the object of creating the access through strata owned by Bocardo was to insert pipes to remove the valuable petroleum lying beneath the surface, that constitutes an unjustifiable intrusion within Bocardo’s land and was thus a trespass. (Footnote: ¹⁰⁰) As I understand it, the judge concluded that the trespass is triggered by the fact that the intrusion is to remove a valuable mineral within the land, even if the person removing it has the right to do so by his licence. In the light of my conclusion, I do not propose to refer to the three cases upon which the judge particularly relied: Re Markham Main Colliery Ltd, (Footnote: ¹⁰¹) Bulli Coal Mining Co v Osborne (Footnote: ¹⁰²)and the majority opinions in the Kentucky Court of Appeal in Edwards v Simms. (Footnote: ¹⁰³)

My conclusion on the first main issue is, therefore, that Star and its predecessors committed an actionable trespass within Bocardo’s lands by the construction of the pipelines PW5, PW8 and PW9 at a depth of 800 to 2800 feet beneath the surface of the Oxted estate. I must therefore consider next the damages issue.

I have already stated that, in argument, the parties agreed: (i) the only remedy for a past trespass that Bocardo can obtain is damages; (ii) any damages that are to be awarded in lieu of the equitable remedy of an injunction will be compensatory; (iii) the measure of damages recoverable in this case would be defined by reference to what Bocardo could have obtained under section 8(2) of the 1966 Act as “compensation or consideration” for the grant of an “ancillary right” to Star to enter upon the strata within Bocardo’s land to drill and place the pipelines and use them for the extraction of petroleum in the reservoir within Bocardo’s land.

Before I consider the extensive arguments raised on the damages issues by the parties, I ought to deal with what might be thought of as a short answer to the question of what damages is Bocardo entitled to for the trespass that Star has committed and will continue to commit by the use of the three pipelines. It might be argued that Bocardo should receive only nominal damages. The argument would be as follows: first, the judge found that the exercise of drilling and using PW5, PW8 and PW9 did not interfere with Bocardo’s use or enjoyment of its land “one iota”. Secondly, by virtue of section 1(1) of the 1934 Act, Bocardo neither owned the oil found beneath its land nor did it have any right to bore, search for or get that oil. Therefore, thirdly, it lost nothing by virtue of the actions of Star’s predecessors as licensees or Star’s own actions in relation to the exploitation of the oilfield beneath the Oxsted estate. Bocardo could not have made any profit out of the use of the pipelines or the oil because the terms of the 1934 Act and the licence precluded it from doing so. Thus Bocardo has suffered no loss at all.

I accept, of course, the rule in trespass cases (which are an exception to the general rule of damages in tort) that a claimant can recover substantial damages even if he has suffered no damage to his property by the trespass, nor lost any proprietary right. Thus, in the so – called “way-leave” cases, a landowner could recover damages equal to the rent the defendant would have had to pay for a way – leave (eg. for an underground railway) during the period that the defendant used the underground tunnel without permission. (Footnote: ¹⁰⁴) This is what Nicholls LJ subsequently described as the “user principle” of damages; (Footnote: ¹⁰⁵) ie. if a person has been using another’s land without permission, he ought to pay for it.

I would be inclined to say that the present case is distinguishable from the “way – leave” cases and similar situations, because Star and its predecessors as licensees under the 1934 Act effectively owned the oil and they had the right to search for and get it. Their only wrongful act was in committing a technical trespass within Bocardo’s land which caused it no loss or damage at all. Therefore, there is an attraction in concluding that Bocardo should be entitled only to nominal damages.

However, I have concluded that this would not be right, because if it were, it would mean (assuming what I say below is correct) that Star would be in a better position by committing the technical trespass that it has, rather than obtaining Bocardo’s agreement or the “ancillary right” to bore the pipelines that I have concluded that it should have done. It cannot be correct, in principle, that a tortfeasor should be liable for a smaller sum in damages than it would have had to pay the claimant if it had followed the law. So, again with some reluctance, I have to consider the main arguments about the effect of section 8(2) of the 1966 Act and how that affects the damages that Star must pay for its past and any continuing trespass.

I set out the terms of section 8(1) and (2) of the 1966 Act again:

“(1)

Where a right is granted under section 1 of this Act….the court may determine the amount and nature of the compensation or consideration to be paid or given and the person to whom it is to be paid or given, either at the time when it determines whether the right should be granted…or at any subsequent time.

(2)

The compensation or consideration in respect of any right [granted under section 1 of this Act]…shall be assessed by the court on the basis of what would be fair and reasonable between a willing grantor and a willing grantee, having regard to the conditions subject to which the right is or is to be granted.”

Given point (iii) in paragraph 88 above, it is necessary to assume that Star (or its predecessor) would, in fact, have been granted an “ancillary right” pursuant to section 1 of the 1966 Actto drive PW5, PW8 and PW9 through strata within Bocardo’s land at depths of between 800 and 2800 feet. Neither side suggested in argument that there would have been any special conditions attached to the grant which would have had any affect on the level of the “compensation or consideration”. For the purposes of section 8(2), it must also be assumed that Bocardo is in the position of being the “willing grantor” and Star the “willing grantee”, although the correct meaning of those terms is in dispute.

There are a number of preliminary points to note about the wording of section 8(2). First, it is dealing with the case where the court is assessing the “compensation” or “consideration” in respect of any right granted under section 1 of the 1966 Act. Generally, that “right” must be something which, apart from the statute, only the grantor can dispose of to another. Secondly, the section pre-supposes that the parties have not been able to agree the appropriate figure to be paid by the grantee to the grantor, so it is the court that has to assess it. Thirdly, the court is entitled to award either “compensation” or “consideration” for the right that has been conferred pursuant to section 1 of the Act. Fourthly, a “willing” grantor must mean a grantor that is prepared to grant the right or “ancillary right”, (in this case to Star to bore the three pipes at that level under Bocardo’s lands in the knowledge that they will not disturb Bocardo’s enjoyment of the land “one iota”), but is not going to do so at any price, however low. Fifthly, a “willing” grantee must mean a grantee that is keen to have the right or “ancillary right”, but not so desperate for it that it is prepared to pay any price to get it. Sixthly, the court has to assess the “compensation” or “consideration” on the basis of what is “fair and reasonable” between the willing grantor and grantee. That is a very broad concept and it is not inhibited by any other wording in section 8(2), save for the words “……… having regard to the conditions subject to which the right is or is to be granted”. The conditions to which the right is subject when granted may be agreed between the parties or may be imposed by the court pursuant to section 5(1) of the 1966 Act.

As I have already noted, the construction of the predecessor to section 8(2) of the 1966 Act, ie. section 9(2) of the 1923 Act, was considered in a number of cases which were analysed by Peter Gibson J in BP v Ryder. I now need to consider those cases in a little more detail to see if they assist on the correct approach to the construction of section 8(2). The first case Peter Gibson J considered was the Markham Colliery case. (Footnote: ¹⁰⁶) That case is of very little help on this point, because there is no proper discussion in it of the meaning of section 9(2) of the 1923 Act. In my opinion, Peter Smith J’s criticism of the way Peter Gibson J dealt with that case in BP v Ryder is therefore unwarranted, precisely because Sankey J does not analyse the construction of section 9(2). The next case is Denaby and Cadeby Main Collieries’ Application, (Footnote: ¹⁰⁷)decided by the Railway and Canal Commissioners in 1928. As Peter Gibson J pointed out, the decision of Salter J in that case does not spell out the principles on which the Commissioners’ conclusions were based. (Footnote: ¹⁰⁸) Next is Consett Iron Co Ltd v Clavering, (Footnote: ¹⁰⁹)a decision of the Court of Appeal. Only Greer LJ commented on section 9(2) and he did so in a dissenting judgment, so that also is of little help.

The next case is the decision of Wynn – Parry J in Re Naylor Benzon Mining Co Ltd. (Footnote: ¹¹⁰)The principal issue was the correct assessment of the amount of “compensation or consideration” to be paid by a grantee to a grantor of a right to work ironstone on the grantor’s land. Wynn – Parry J identified his first task as being to construe the phrase “on the basis of what would be fair between a willing grantor and willing grantee”. (Footnote: ¹¹¹)The judge considered the wording of section 63 of the Lands Clauses Consolidation Act 1845,(“the 1845 Act”) the decision of Eve J in South Eastern Railway Company v London County Council, (Footnote: ¹¹²) that of Fletcher Moulton LJ in Re Lucas and Chesterfield Gas and Water Board (Footnote: ¹¹³) and a statement of Lord Dunedin in the Privy Council’s advice in Corrie v MacDermott. (Footnote: ¹¹⁴)He noted the different statutory wording in the 1845 Act and the 1923 Act and the fact that there was no authority binding on him on the construction of section 9 of the 1923 Act. However, he concluded that, in his opinion:

“…the same principles which have been applied in the application of s. 63 of the Lands Clauses Act, 1845, ought to be applied to cases under s.9 of the Act of 1923, which in my view, on its true construction, is a section directing the assessment of compensation and therefore designed to give to a man the fair value to him of what is being taken from him”. (Footnote: ¹¹⁵)

Lastly, there is the decision of Buckley J in Re Associated Portland Cement Manufacturers Limited’s Application. (Footnote: ¹¹⁶)He held that section 9(2) required the court, in mandatory terms, to:

“…ascertain, as well as it can, upon what fair and reasonable terms willing parties negotiating outside the statute – that is in a free market – would be likely to agree for the grant of such rights subject to such conditions as it is proposed that the court shall grant or impose under the statute, and, having ascertained those terms, to assess the compensation or consideration to be paid or given for a grant under the statute upon that basis. This process must involve investigating the nature of comparable transactions in the free market, so far as they can be found”.

Peter Gibson J in BP v Ryder (Footnote: ¹¹⁷) decided that the effect of these cases is to support the conclusion that when the court assesses the “compensation or consideration” pursuant to the terms of section 8(2) of the 1966 Act, it should do so in a manner consistent with the general principles evolved for the assessment of payments made for compulsory acquisitions under the 1845 Act. I have set out Peter Gibson J’s summary of those principles at paragraph 44 above. I agree that Wynn – Parry J’s decision in Re Naylor Benzon Mining Co Ltd supports Peter Gibson J’s conclusion. I am less sure that Buckley J’s statements do so. He appears to be founding his remarks solely on the wording of section 9(2) of the 1923 Act.

The more important question, however, is whether Peter Gibson J was correct to conclude, as effectively he did, that he also should construe section 8(2) in a way that is consistent with those “compulsory purchase” principles as they have been evolved. To answer that question, two issues have to be considered. First, what are those principles? Secondly, to what extent does the wording of section 8(2) of the 1966 Act encapsulate them or differ from them?

The compulsory purchase principles have most recently been analysed by the House of Lords in Waters v Welsh Development Agency, (Footnote: ¹¹⁸)which was not considered by Peter Smith J. The principal speech was given by Lord Nicholls of Birkenhead, with whom Lord Woolf and Lord Steyn agreed. (Footnote: ¹¹⁹) Lord Nicholls traced the development of the law of compensation for land compulsorily acquired by the state from the first statute, the Lands Clauses Consolidation Act 1845, to its application under the current statute, the Land Compensation Act 1961 as subsequently amended by the Local Government, Planning and Land Act 1980.

For the purposes of the present case, the important points in Lord Nicholls’ review are as follows: first, the yardstick for compensation set out in the 1845 Act was the “value” of the land acquired. That was interpreted to mean the “open market value”, which was to be assessed by reference to “the price a willing seller might reasonably be able to obtain from a willing buyer”. The first should not be regarded as disinclined to sell and the second should not be regarded as under any urgent necessity to buy. (Footnote: ¹²⁰) Secondly, in general, the compensation given to a seller under a compulsory acquisition would normally reflect any enhanced value possessed by the subject land because its location made it specially valuable to a particular buyer or class of buyers. (Footnote: ¹²¹) But, thirdly, this second principle was subject to a qualification. This is that “enhancement in the value of the land that is attributable solely to the particular purpose for which it is being compulsorily acquired and an acquiring authority’s pressing need of the land for that purpose, are to be disregarded”. (Footnote: ¹²²) This is the so – called “value to the owner” principle, to be contrasted with the “value to the purchaser or acquirer”. In working out what, if any, increased value has to be disregarded, Lord Nicholls expressed the principle, as developed in the cases, thus:

“What is relevant, because this may affect the value of the land, is the use the acquiring authority proposes to make of the land it is acquiring. Accordingly, in identifying any enhanced value that must be disregarded, it is always necessary to look beyond the mere existence of the power of compulsory purchase. It is necessary to identify the use proposed to be made of the land under the scheme for which the land is being taken. Hence, the introduction of the concept of the “scheme” or equivalent expression such as project or undertaking”. (Footnote: ¹²³)

Fourthly, Lord Nicholls noted that the effect of the current Rule 3 of section 5 of the Land Compensation Act 1961 reflects the statement made by Fletcher Moulton LJ in Re Lucas and Chesterfield Gas and Water Board, (Footnote: ¹²⁴)that insofar as the special suitability or adaptability of the land gives it a special or enhanced value that exists only for a particular purpose obtained by powers of compulsory purchase, that value is not to be taken into consideration when fixing the price. (Footnote: ¹²⁵) Lord Nicholls explained that:

“market value does not include enhanced value attributable solely to the particular use proposed to be made of the land under a scheme of which compulsory acquisition of the subject land is an integral part. This element of value is not part of market value because it is not an element that the owner could have realised in the open market”. (Footnote: ¹²⁶)

However, fifthly, where land possessed potential that, theoretically, could be realised by other purchasers but, in practice, the only person who could realise the land’s potential was the compulsory purchaser, that did not mean that this potential was to be entirely disregarded when fixing the price to be paid as compensation. Insofar as the statement of Fletcher Moulton LJ in Re Lucas and Chesterfield Gas and Water Board (at page 31) suggested the contrary, that was wrong. That special suitability or adaptability still had to be taken into account, on the assumption of a willing purchaser and willing vendor of that land with its characteristics, but also assuming there would be several possible purchasers. (Footnote: ¹²⁷)

Sixthly, Lord Nicholls analysed the so-called “Point Gourde principle”. (Footnote: ¹²⁸)He concluded that it is not, ultimately, distinct from the general “value to the owner” principle of compensation. The particular aspect of that general rule that is encapsulated in the “Point Gourde principle” is that in assessing the “value to the owner” of the land that is to be acquired compulsorily, no regard is taken of the enhanced value of that land by the acquiring authority, either as a result of the use of that land in the scheme for which it is to be acquired, or as a result of the use of other land that is compulsorily acquired for the same scheme. (Footnote: ¹²⁹) The “Point Gourde principle” still applies after the Land Compensation Act 1961, which is not an exhaustive statutory code of compensation principles. (Footnote: ¹³⁰) Practical difficulties may arise in identifying the area of the “scheme” in question, but it is a question of fact in each case. (Footnote: ¹³¹)

Lastly, Lord Nicholls considered the relationship between the “value to owner” principle (including the “Point Gourde principle”) and the principle that if the land to be acquired has a special or enhanced value because of its location account should be taken of that value. If that land has a pre - existing “key” or “ransom” value to the development of other land, which is not dependent on the “scheme”, then that feature has to be taken into account when assessing value “as much for the purposes of compensation as on an actual sale in the open market”. (Footnote: ¹³²)

Lord Brown of Eaton-under-Heywood had sympathy with Lord Scott’s (dissenting) view that the “Point Gourde principle” was a “misconceived accretion to the legislative scheme which itself, therefore, ought henceforth to be disregarded”. (Footnote: ¹³³)But he concluded that the combination of time, a steady stream of case law and the assumptions of many analyists, including the Law Commission, prevented an adoption of that approach. So he concluded that the principle embodied in the “Point Gourd” line of decisions remained a rule of law. However, he emphasised that “any key value that land may have is to be included within its open market value and is to be disregarded, if at all, solely by reference to the Point Gourde rule”. (Footnote: ¹³⁴)

I have concluded that section 8(2) of the 1966 Act should be construed, so far as the words allow, in a manner which is consistent with the statutory and case law regime establishing the principles for compensation when there is compulsory acquisition of land. This is for the following reasons. First, the 1966 Act and its predecessor, the 1923 Act, were passed by Parliament in the knowledge of the compulsory acquisition regime and the principles developed in the cases under it. Secondly, section 1(1) of the 1966 Act gives the court a power to confer rights, by compulsion if necessary, concerning the use of land upon persons having “…a right to work minerals if the right is required in order that the minerals may be properly and conveniently worked by him”. The use of this power may therefore involve taking away rights or benefits enjoyed by the “grantor”. In this sense the power given to a court under section 1 of the 1966 Act is analogous to the state’s statutory power to acquire land compulsorily. Thirdly, as Peter Gibson J pointed out in BP v Ryder, (Footnote: ¹³⁵) it is contemplated by section 3(2)(d) of the 1966 Act that the court can grant a right when there have been no negotiations between the “grantor” and “grantee” because a person with the power to grant a right unreasonably refuses to grant it or makes or demands unreasonable terms. That position is also akin to a compulsory acquisition of land by the state. Fourthly, section 8(2), just like the compulsory purchase regime, assumes a willing seller/grantor and a willing buyer/grantee. In my view the phrases “willing grantor” and “willing grantee” should be given the same meaning as those given to “willing buyer” and “willing seller” by Lord Nicholls in the Waters case, unless there is some reason not to do so and I cannot see any. Fifthly, the phrase “what would be fair and reasonable between a willing grantor and a willing grantee” in section 8(2) is analogous, in my view, to the principles in compulsory acquisition of (a) enhanced value by virtue of location of the subject land or pre-existing “key value”; but (b) subject to the principle of compensation by reference only to the “value to the owner” principle, including the “Point Gourde principle”.

Buckley J’s construction of section 9(2) of the 1923 Act in the case of Re Associated Portland Cement Manufacturers Limited’s Application (Footnote: ¹³⁶)may suggest a different approach to mine. If his construction of section 9(2) (and therefore section 8(2) of the 1966 Act) as meaning “willing parties negotiating outside the statute – that is in a free market”, implies no restraints on either side, I cannot accept it, because it is not what the wording states. Nor would I accept that the section involves, without qualification, “investigating comparable transactions in the free market, so far as they can be found”. Again, that is not what the section states. Moreover, that analysis fails to take account of the requirement, under section 3(2)(b) of the 1934 Act, that the court add an allowance of at least 10% to the assessment, on account of the acquisition being compulsory. That provision seems to me to be reminiscent of the customary allowance that was added to the price of land by tribunals prior to the reforms of the compulsory acquisition regime by the Acquisition of Land (Assessment of Compensation) Act 1919. (Footnote: ¹³⁷) In other words, it assumes a compulsory purchase regime for compensation/consideration is the basis on which the assessment is made.

In BP v Ryder, Peter Gibson J summarised the correct approach to the valuation of the “compensation or consideration” to be awarded under section 8(2) for a right granted under section 1 of the 1966 Act as: “…the value of what the estate will lose by the grant”. (Footnote: ¹³⁸)As I read the judgment of Peter Smith J, at various points he appears to accept that looking at compulsory purchase principles by analogy was, in principle, a legitimate aid to the construction of section 8(2). (Footnote: ¹³⁹) However, he seems ultimately to have concluded that section 8(2) is “not a compulsory acquisition section; it provides for acquisition of ancillary rights as between a willing grantor and a willing grantee”. (Footnote: ¹⁴⁰)He expressly criticised the approach of Peter Gibson J in BP v Ryder on three grounds. First, because, in his view, Peter Gibson J did not give proper attention to the requirement in section 8(2) that the compensation or consideration should be assessed on what would be “fair and reasonable between a willing grantor and a willing grantee”. Secondly, because, in his view, Peter Gibson J did not pay proper regard to three particular decisions which had considered the compulsory acquisition compensation regime or an analogous rent review regime. (Footnote: ¹⁴¹) Thirdly, because in his opinion, the effect of Peter Gibson J’s decision was that the figure of what would be “fair and reasonable” would be reduced because it treated the licensee as being the only possible interested party. (Footnote: ¹⁴²)

In my opinion these criticisms of Peter Gibson J’s analysis and his construction of section 8(2) in BP v Ryder are not justified. First, as I have already stated, I think that Peter Gibson J was right in examining the compulsory purchase principles and cases as an aid to the construction of section 8(2). Secondly, with the benefit of the House of Lords’ analysis of that regime in the Waters case, it seems to me, with respect, that Peter Gibson J correctly analysed the effect of the regime and the cases which have interpreted it. Thirdly, given those principles, Peter Gibson J gave full effect to the words in section 8(2) that the assessment should be on the basis of “what is fair and reasonable between a willing grantor and willing grantee”. He was therefore right to say that the loss of a grantor’s “veto” should not be taken into account. Fourthly, however, Peter Gibson J was correct to be conscious of the fact that when section 8(2) is used to assess compensation/consideration for the grant of rights or ancillary rights under the 1934 Act, there is an unusual factor to take into account: viz. that the grantee will be a monopoly licensee of the right to bore for, search and get oil in a certain area. In certain circumstances, therefore, it may be assumed that the licensee will be prepared to pay more for the right than the value the estate will lose by the grant of rights under the 1966 Act, because the licensee is in that monopoly position. (Footnote: ¹⁴³) I deal below with the question of how that should be approached. But, the reverse of that is also true. The exploitation of the petroleum licence in the specified area is the “scheme” for the purposes of the valuation of what is fair between willing grantor and willing grantee. Therefore, any additional value in the right that arises solely by virtue of the existence of “the scheme” and the use to which the right will be put in pursuance of “the scheme” has to be disregarded.

On the correct construction of section 8(2) of the 1966 Act, the question is: what would be a fair and reasonable compensation or consideration between a willing grantor (Bocardo) and willing grantee (Star) for the right to drill three pipelines at depths of 800 to 2800 feet under Bocardo’s land, which would not disturb or detract from Bocardo’s use of the land “one iota”? Put in the terms that Peter Gibson J expressed it in BP v Ryder, (Footnote: ¹⁴⁴)what is the value that Bocardo would have lost by the grant to Star of this right? The straightforward answer is “nothing”, because the right to drill pipes at those depths is worthless to Bocardo, unless it could be used to exploit the petroleum licence, which Bocardo cannot.

This initial reaction is reinforced by two further factors. First, the right to drill pipelines at those depths beneath Bocardo’s land had no pre-existing “key” value apart from the petroleum licence which might be utilised by either Star or anyone else. Secondly, the only value that the right to drill the pipelines has is that created by virtue of the “scheme”, viz. the right to search, bore for and get petroleum granted first to Star’s predecessor as licensee. That value has to be disregarded under the “value to owner” principle or its sub – category, the “Point Gourde principle”.

However, Star and its predecessors had a “special interest” in acquiring the right to drill at depths beneath the Oxted estate because of their position as licensees. That has to be taken into account as part of the formula for assessing what is “fair and reasonable between a willing grantor and willing grantee”. How is that to be done? Peter Smith J criticised (Footnote: ¹⁴⁵) the analysis of Peter Gibson J in BP v Ryder, in which he held (referring to The Indian case in particular) that the extra value of the special interest in the right was the notional amount of “one more bid” to be made by the “special purchaser” to secure the right he needed. (Footnote: ¹⁴⁶) Mr Gaunt submitted that Peter Smith J’s criticism was well – founded, because Peter Gibson J’s approach lead to an unrealistically low value of the right to the “special purchaser”.

On this one point I do find, with respect, difficulty with Peter Gibson J’s conclusion that the extra value equates to “one more bid” in an imaginary auction, where there are “competing special purchasers”. (Footnote: ¹⁴⁷) That seems artificial. I think that it is better to ask a more general question, which is: given that the grantee is in a special position, what (if anything) would that add to the value of the right to be granted, bearing in mind the requirement that overall the assessment must be fair and reasonable between a willing grantor and willing grantee? It is a question of fact in each case.

Before the judge, Mr Colin Smith, Star’s expert valuer, gave his opinion (based on Peter Gibson J’s analysis in BP v Ryder) that the compensation payable by Star to Bocardo pursuant to section 8(2) of the 1966 Act for the right to drill 3 pipelines at depth would have been assessed at £82.50. (Footnote: ¹⁴⁸) That sum comprised three elements: (i) £50, being the standard compulsory purchase compensation paid for a deep tunnel; (ii) an additional 50% of that sum to account for the fact that Star, as the holder of the petroleum licence, was a “special purchaser”; and (iii) an additional 10% because section 3(2)(b) of the 1934 Act requires it. On the basis of my conclusions as to the correct legal approach, it seems to me that I ought to accept this evidence of what the assessment under section 8(2) would have been. Mr Gaunt attacked the principles adopted by Mr Smith, but not the figures. The 50% addition for Star’s position as a “special purchaser” seems adequate, given that, on my analysis, the basic loss of value to Bocardo is zero.

Therefore, I conclude that if a court had had to assess the compensation or consideration payable by Star to Bocardo for the right to bore the three pipelines under its land, it would have fixed a figure of £82.50. This would have been a one – off, lump sum payment.

I have already noted that counsel agreed that the measure of damages for the past and future trespass should be assessed on the basis of a hypothetical negotiation between the parties before the trespass began. As I understood the oral argument of Mr Gaunt, he accepted that it should be assumed that the hypothetical negotiations took place before the pipelines were in place; to do otherwise would be unfair and unreasonable. The negotiation would be for the price to pay for the right of Star to bore and use the three pipelines in the positions as they are now. It must also be assumed that the parties would act on my conclusions on the law. Therefore they would know that the total sum that would be assessed by a court under section 8(2) of the 1966 Act, to be given to Bocardo as compensation/consideration for granting this right to Star, would be very small, ie. in the region of £82.50. I would be prepared to hold that Star would have been prepared to be generous in negotiation, so as to avoid delay and the possible expense of having to take the issue to court.

I would assess this figure at a maximum of £1000, or over 10 times the figure a court would award under section 8(2) of the 1966 Act, together with a 10% uplift in accordance with section 3(2)(b) of the 1934 Act. I have made that assessment on the basis that lawyers are expensive and time wasted on legal wrangling would be petroleum - and so money - lost. (Footnote: ¹⁴⁹)

I can summarise my conclusions as follows:

In these circumstances, I think that there is no need for me to deal with Mr Driscoll’s arguments based on the Pipelines Act 1962 and I shall not do so.

I would therefore allow the appeal, set aside the order of Peter Smith J and declare: (i) that Star has committed and continues to commit a trespass so long as it continues to use the pipelines PW5, PW8 and PW9 insofar as they are within Bocardo’s land; but (ii) Bocardo is entitled to damages of £1000 only in respect of any such past and continuing trespass.

This paragraph applies to any minerals other than. . . peat cut for purposes other than sale.

A right to search for or work any minerals to which this paragraph applies may be conferred on any person (exercisable either by himself or through a lessee).

Where the working of any minerals to which this paragraph applies, or the working of any such minerals in the most efficient and economical manner, is impeded by any restrictions, terms or conditions contained in a mining lease, or otherwise binding on the person entitled to work the minerals, a right may be conferred to work the minerals freed wholly or partially from the restrictions or conditions, or to work the minerals on other terms and conditions.

An ancillary right may be conferred on a person having the right to work minerals, who is working or desirous of working the minerals either by himself or through his lessees, if the right is required in order that the minerals may be properly and conveniently worked by him, and the proper and efficient working of the minerals is unduly hampered by his inability or failure to obtain that right.

In this Act “ancillary right” means, in relation to minerals, any facility, right or privilege and, in particular, but without prejudice to the generality of the foregoing provisions of this subsection, that expression shall include—

a right to let down the surface,

a right of air-way, shaft-way or surface or underground wayleave, or other right for the purpose of access to [or conveyance of minerals or the] ventilation or drainage of the mines,

a right to use and occupy the surface for the erection of washeries, coke ovens, railways, by-product works or brick making or other works, or of dwellings for persons employed in connection with the working of the minerals or with any such works as aforesaid;

a right to obtain a supply of water or other substances in connection with the working of minerals;

a right to dispose of water or other liquid matter obtained from mines or any by-product works.

The court in determining whether a right under subsection (1)(a) above should be granted—

shall have regard to the value of minerals required for the support of any works or buildings or intended works or buildings on or below the surface as compared with the value of the buildings or works, and as to whether the support of the works or buildings or intended works or buildings is in the national interest more important than the working of those minerals, or

if there are no such buildings or works, shall have regard to the extent to which the use of the surface for the purposes for which it is used or is intended to be used will be prejudicially affected by subsidence, and as to whether the support of the surface is in the national interest more important than the working of the minerals required for its support.

No right shall be granted under section 1 of this Act unless the court is satisfied that the grant is expedient in the national interest.

No right shall be granted under section 1 of this Act unless it is shown that it is not reasonably practicable to obtain the right by private arrangement for any of the following reasons—

An application for the grant of a right under section 1 of this Act shall be sent to the Minister, and the applicant for an ancillary right for the purpose of or in connection with working any minerals may be a person either having or applying for the right to work those minerals.

The application shall set out the circumstances alleged to justify the grant of the right, and shall be in such form and accompanied by such information verified in such manner as the Minister may direct.

The Minister shall consider the application, and shall, unless after communication with such other parties interested (if any) as he may think fit, he is of opinion that a prima facie case is not made out, refer the matter to the court:

Where a matter is referred to the court under the last foregoing section, the court, if satisfied that the requirements of this Act are complied with in the case of the applicant, may, by order, grant the right on such terms and subject to such conditions, and for such period, as the court may think fit, and upon such an order being made, the right specified in the order shall, subject to the following provisions of this Act, vest in the applicant.

Where a right is granted, such compensation or consideration as in default of agreement may be determined by the court shall be paid or given by the applicant in respect of the acquisition of the right to such persons as the court may determine to be entitled thereto.

In determining whether any right should be granted or the conditions upon which any such right should be granted the court shall have regard to all the circumstances of the case, and in particular to the extent to which the retention of any minerals is required for the protection of any mines or other works from flooding, or for any other mining purpose, and (so far as relevant) to the royalties, covenants, and conditions reserved by or contained in the applicant’s existing mining lease or leases (if any), or customary in mining leases in the district.

Where a right is granted under section 1 of this Act, or any restriction is imposed under section 7 of this Act, the court may determine the amount and nature of compensation or consideration to be paid or given and the persons to whom it is to be paid or given, either at the time when it determines whether the right should be granted or the restrictions imposed or at any subsequent time.

The compensation or consideration in respect of any right, including a right to enforce restrictions, shall be assessed by the court on the basis of what would be fair and reasonable between a willing grantor and a willing grantee, having regard to the conditions subject to which the right is or is to be granted.”