Historic mineral rights: clear as mudstone?

In David Heneage Wynne-Finch, Richard William Kendrick Price, Rupert Thomas Mead v Natural Resources Body for Wales [2020] EWHC 1924 (Ch) Mrs Justice Falk considered a claim by the Wynnstay Estate to ownership of mudstone across 40 titles covering hundreds of acres of forestry land controlled by the Natural Resources Body for Wales (NRW). In broad summary, the Judge found that:

1. mudstone was not a mineral for the purposes of the mineral reservations relied upon by the Estate; and
2. if she was wrong on that, NRW had in any event established title to the mudstone by adverse possession.

The decision was made more complex by the fact that the land was subject to different types of transaction, which might affect the transmission of the rights. Accordingly, the land was packaged into four categories, and it was necessary for the Judge to consider the application of the relevant principles to each category.

Background

NRW (or the relevant Government department) held the paper title to all of the relevant land, and via its predecessor in Wales, the Forestry Commission (FC), had held the land for varying periods in excess of 20 years.

As is common in forestry operations, the practice had been for NRW and the FC to dig forest access and harvesting tracks, utilising stone from localised quarries as a surface. Of course NRW had also disturbed the surface of the land into the underlying stone many times through the normal conduct of forestry operations. That stone was mostly categorised as Silurian mudstone with some interbedded sandstone and shales, and was, in places, exposed, or only covered by a thin layer of topsoil.

The Estate or its predecessors in title had at some point reserved the mineral rights over the land, and now claimed that NRW was not entitled to exploit it without its permission.

Examples of the reservations are set out below.

Where the reservation was express by conveyance:

EXCEPTING AND RESERVING unto the vendor and his heirs and his successors in title under the said settlement and his and their assigns (a) All mines beds and quarries of coal and ironstone and all other metals stone and minerals within […]

TOGETHER with all necessary or proper powers rights and easements for searching for mining working getting and carrying away the same whether by underground or surface workings including the right to let down the surface whether built upon or not proper compensation being paid to the Purchaser his heirs or assigns for all damage done to the surface or the buildings thereon and for the occupation of the surface in or about the exercise of such rights and powers the amount of such compensation in case of dispute to be settled by arbitration…

Where the Crown was the predecessor in title, and the reservation was express:

… all the Mines Minerals and Substrata within upon or under and also all the estate right and interest of the Queen’s Majesty in and to the soil and surface of the piece or parcel of open common or waste land…

Where the reservation occurred as a result of a contractual enclosure agreement:

And saving and reserving to the said Sir Watkin Williams Wynn, his heirs, assigns, and his successors … all mines, minerals, stone, and other substrata, lying within or under the said pieces or parcels of land or Sheepwalks, or any part thereof, whether opened or unopened, with full liberty to and for him or them, and all persons employed by him or them, from time to time and at all times for ever hereafter, by any temporary or permanent occupation or use of any part of the surface or of any part of the said pieces or parcels of land or Sheepwalks, and by all usual and convenient ways and means, to work, procure, win, separate, smelt, refine and take away the said mines, minerals, stone, and other substrata, or the produce thereof,

It was more or less common ground between the parties that the stone involved had little value, and indeed on the open market it was probably of negative value, given the cost of mining and transporting it. On the other hand it was worth something to NRW, as it was usefully located, and suited the limited purposes of forest operations.

The Estate was not looking for the right to enter and exploit the stone itself, instead it wanted NRW to pay a licence or royalty for the exploitation, and to pay damages in trespass/breach of contract for that which had been exploited already over time.

The Court’s approach

The Court first considered whether the rights claimed by the Estate were within the various minerals reservations, before looking at the adverse possession arguments.

Minerals reservations

The Judge first considered Earl of Lonsdale v Attorney General[1] the leading authority on the construction of minerals reservations, which includes the following principles (wildly paraphrasing):

(1)  Though the wide sense given to the phrase ‘mines and minerals’ by [older cases] is a sense which the phrase is capable of bearing and can still be attributed to it in a proper context, it cannot now properly be regarded as a primary or literal sense which is always to be applied in the absence of a sufficiently clear contrary context.

(2)  The phrase ‘mines and minerals’ is not a definite term, but is one that is capable of bearing a wide variety of meanings, not necessarily, but sometimes: ‘all such substances as are dug out of the earth by means of a mine.’

(3)  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 to ascertain what the phrase meant in the vernacular of ‘the mining world, the commercial world and landowners at the time of the grant,’ that is: persons who may ordinarily be expected to have both some knowledge of mines and minerals and also some experience of dealing with them in the course of commerce in this country.

(4)  The meaning of the phrase in this vernacular sense may be derived either from direct evidence as to the vernacular meaning at the relevant time or by inference drawn by the court.

(5)  Where it is clearly established that, at the date of the grant, a particular vernacular meaning was attributed to the phrase ‘mines and minerals’ by ‘the mining world, the commercial world and landowners,’ the court will be predisposed to adopt that meaning.

(6)  One pointer to the parties’ intentions may be to consider whether or not the substances in question are exceptional in use, in value and in character. Another pointer is the evidence as to the general state of knowledge of the relevant substance at the date of the grant and the way in which it was then regarded and treated as a commercial matter. A third, significant pointer may be derived from any express powers of working that are conferred by the instrument in question.

(7)  In considering whether a grant or reservation of mines and minerals includes a specified substance, it is irrelevant that the parties did not actually have that substance in mind. The test of their intention is an objective one.

The Judge also considered extensive submissions on other cases which were said to add or detract from the above principles, in some instances particularly with regard to the type of reservation (e.g. enclosure).

A point put by the excellent Leading Counsel for NRW was, based upon the authority of  Waring v Foden,[2] that the first question is whether the substance in question is exceptional, and is not the ordinary soil of the district. The second question is which exceptional substances are and are not within the reservation. The “vernacular” test (point 5 above) is relevant to the second question, and does not decide exceptionality. The resulting thrust of the point is that if all of the land conveyed is made up of the same substance, and it is reserved, there would appear to be little point in purchasing it (at least at freehold values). To put it another way, the mineral reservation would swallow up the grant, so only the clearest words would reserve the right to destroy the surface to the mineral rights holder.

In applying these authorities the Judge was clearly of the view that the stone was so prevalent, and of such low value, that the parties to the various transfers/reservations would have little interest in reserving it.

The Judge also referred to the powers to work the minerals accompanying the reservation. Clearly, these provisions do often shed light on a reservation since if the powers to exploit do not match the material, then a reservation of the mineral may be pointless. For instance: a power to “…make merchantable, and take and carry away”, where mudstone would neither have been regarded as merchantable, nor worth carrying away.

The Judge also made number of other interesting points,[3] and the cumulative result was that the stone was found not to be included in any of the reservations relied upon by the Estate.

Adverse possession of minerals

To start with, the Judge made it clear that where the mines and minerals are already severed from the title, adverse possession of the surface alone will not start the clock running for the possession of the mines and minerals.

Adverse possession of ‘substrata’ is not a topic which the Courts have had to consider regularly. The parties agreed that the normal tests for adverse possession would apply, namely:

1. factual possession, in the sense of a sufficient degree of physical custody and control; and
2. an intention to possess, meaning an intention to exercise that custody and control on its own behalf and for its own benefit.

The required period in this instance would be 12 years, under s 15 Limitation Act 1980.

The Judge observed that in order to establish factual possession, the alleged possessor must be shown to have been dealing with the land as an occupying owner might be expected to deal with it, and that no one else has done so.

An unusual feature of this case is the fact that it would not be possible for NRW to factually possess all of the stone (or even rights to it) for the required period, as one might expect for a path, or field.

The Judge relied upon Roberts v Swangrove Estates Ltd[4] in support of the proposition that:

…acts on one part of an area owned by a single paper title owner may be treated as evidencing possession of the whole area provided that there is such a common character of locality as would raise a reasonable inference that if a person were possessed of one part of it as owner then he would so possess the whole of it.

Accordingly, the Judge determined that:

1. there was a common character of locality as would raise a reasonable inference that if a person were possessed of one part of it as owner then he would so possess the whole of it;
2. it was more likely than not that the digging of quarries, tracks, and cuttings, as well as other forest operations (such as tree planting itself) which disturbed the stone, had occurred on all of the relevant areas; and
3. that these actions were unequivocal, demonstrating an intention by NRW or its predecessors to possess.

In conclusion on adverse possession the Judge found:

I consider that the Defendant has established factual possession, with the necessary intention to possess, of at least a sufficient depth of mudstone over the area claimed to allow any activity that is consistent with forestry operations. This includes the construction and improvement or repair of forest roads and tracks, turning circles for machinery, ramps for harvesting and related quarrying to produce material for those purposes. These are the uses that an occupying owner of the forest might expect to make of the mudstone.

Accordingly NRW was successful on the alternative arguments as well.

Conclusions

The Claimants must be given an enormous amount of credit for pursuing such a wide-ranging and complex claim, which it is obvious from the judgment was enthusiastically and effectively litigated.

The challenges would have included a large amount of historic title evidence, expert evidence across a significant geographical area, and diverse complex matters of law.

That said, the author’s view is that the decision on the interpretation of the minerals reservation was unsurprising, given the prevalanece of the material, and its nominal value.

On the other hand, the adverse possession decision was made in the absence of a great deal of law on the point, and the finding that the necessary intention to possess and factual possession extended across the land does appear more adventurous, even on the basis that it was the correct decision.

The case tracker confirms that the Estate has sought permission to appeal from the Court of Appeal, so if the analysis above is correct, perhaps a pyrrhic victory is on the way, where the Court upholds the minerals decision, but overturns the adverse possession decision!

Lessons for practice

In practice we often take little notice of minerals reservations, either because our clients instruct that there is nothing of value, or what is there might seem unworkable. But it should be remembered that reserving minerals can also have an effect upon the ability to excavate at all, and one never knows when something might become valuable, perhaps to a particular occupier. In Wynne-Finch the value of the Estate’s claim, if the minerals clause had expressly mentioned mudstone may well have been considerable.