Coal Authority v Davidson & Anor

Compensation for mining subsidence under the Coal Mining Subsidence Act 1991 requires physical subsidence damage to the claimant’s land or property. Pure economic loss or blight caused by damage to neighbouring property is not recoverable under the Act. Economic loss may be recoverable where the claimant’s property has itself suffered physical subsidence damage, but the statutory remedies remain carefully circumscribed. The 1994 Regulations cannot enlarge the statutory basis of liability. On an appeal under section 69 of the Arbitration Act 1996, permission may be granted where the question substantially affects the parties’ rights, was submitted to the tribunal, and the award is obviously wrong or involves a question of general public importance whose determination is at least open to serious doubt.

The Respondents owned adjoining terraced properties at 14 and 16 Rowley Lane. Their neighbouring properties at Nos 18 and 20 had suffered severe subsidence damage and were to be purchased and demolished by the Authority.

The Respondents commenced arbitrations under the Coal Mining Subsidence (Arbitration Schemes) Regulations 1994, claiming that their properties had become unsaleable. The arbitrator found no new physical damage to their properties during the preceding six years, but awarded compensation and ordered the Authority to purchase them on the basis of loss in value caused by the neighbouring damage.

The Authority sought permission to appeal under section 69 of the Arbitration Act 1996. The central issue was whether the statutory regime permitted a claim for blight or economic loss where the claimant’s property had suffered no physical subsidence damage.

1. Permission and appeal. The issue substantially affected the parties’ rights, had been submitted to the arbitrator, was a question of general public importance, and the awards were obviously wrong on a point of law. Permission to appeal was granted and the awards were varied to dismiss both claims.
2. Section 1(1) of the Coal Mining Subsidence Act 1991 defines subsidence damage by reference to damage to land, buildings, structures or works caused by withdrawal of support. That language concerns physical damage, not loss suffered by an individual. Section 1(2), dealing with alterations to land levels or gradients, reinforces that construction.
3. The wider statutory scheme, including sections 2, 3, 6, 10, 11 and 29, is founded on the existence of physical subsidence damage. Economic loss or blight may be recoverable in a case involving physical damage, but only within the remedies and limits prescribed by the Act.
4. The expression “affected by subsidence damage” in regulation 2(2)(a) of the 1994 Regulations does not extend to property whose value is reduced solely because neighbouring property has suffered physical damage. The Regulations provide the detailed machinery for statutory claims and cannot enlarge the liability created by the Act. Regulation 2(2)(b) separately addresses potential future blight.
5. The arbitrator’s factual finding that the Respondents’ properties had suffered no physical damage could not be challenged on the section 69 appeal. On that finding, there was no statutory cause of action. Limitation therefore had no relevance, and the earlier repaired and compromised damage could not found a new claim.
6. The same result followed at common law. A claim for blight without physical damage would ordinarily be a claim for pure economic loss. The Authority therefore had no statutory or common-law liability to purchase the properties.

The judgment itself records no earlier court decision. It concerned an application for permission to appeal, heard together with the substantive appeal, from two arbitral awards dated 11 June 2008.