Star Energy Weald Basin Limited and another v Bocardo SA

A freehold owner owns the workable strata beneath the surface unless they have been alienated by conveyance, common law or statute. Unauthorised directional drilling through those strata is therefore trespass, even at depths between 800 and 2,800 feet and without physical damage or interference with surface use.

A statutory petroleum licence transfers rights in the petroleum but does not authorise entry upon another person’s land. The licensee must obtain an agreement or an ancillary statutory right.

Where trespass damages are agreed to equal the compensation payable for compulsory acquisition of that right, the assessment follows the value-to-owner and no-scheme principles. Any key or ransom value created entirely by the petroleum-exploitation scheme is disregarded. Compensation reflects the owner’s loss, not the licensee’s gain.

Bocardo SA owned the Oxted Estate. Three directionally drilled wells entered its substrata at depths between approximately 800 and 1,300 feet and continued as deep as 2,900 feet. The wells enabled the respondents, who held a Crown petroleum-production licence, to extract petroleum efficiently from the Palmers Wood Oil Field. Neither the respondents nor their predecessors obtained Bocardo’s agreement or an ancillary statutory right.

Peter Smith J held that the drilling was trespass and awarded £621,180 plus interest, with provision for future damages: [2008] EWHC 1756 (Ch). The Court of Appeal affirmed liability but reduced the award to £1,000: [2009] EWCA Civ 579.

Bocardo appealed on damages. The respondents cross-appealed on liability. The central questions were whether ownership and possession extended to the deep substrata, whether the petroleum legislation authorised the intrusion, and whether statutory compulsory-acquisition principles excluded the claimed key or ransom value.

1. Disposition. Bocardo’s appeal against the £1,000 damages award was dismissed by a majority of three to two. The respondents’ cross-appeal on liability in trespass was dismissed unanimously. Lord Walker and Lord Collins agreed with Lord Brown on damages. Lord Hope and Lord Clarke would have allowed Bocardo’s appeal and remitted the assessment of damages.
2. Ownership and possession. Lord Hope, with whom the other Justices agreed on liability, held that the freehold owner owns the strata beneath the surface, including minerals, unless ownership has been alienated by conveyance, common law or statute. The maxim cuius est solum, eius est usque ad coelum et ad inferos remains a useful, though imperfect, statement of that rule. There must be a point at which depth makes ownership absurd, but workable strata between 800 and 2,800 feet were far from it. Paper title also carried the prima facie right to possession, so Bocardo was deemed to possess those strata.
3. No statutory defence. The Crown’s ownership of petroleum and its grant of a licence to search, bore for and get petroleum did not confer a right to enter or interfere with another person’s land. Section 10(3) of the Petroleum (Production) Act 1934 preserved that distinction. A licensee requiring an underground wayleave had to negotiate with the owner or obtain an ancillary right under the Mines (Working Facilities and Support) Act 1966. The drilling and continuing presence of the wells were therefore actionable trespasses.
4. Damages. Lord Brown’s majority approach treated the agreed statutory comparator as compulsory acquisition. Compensation under section 8(2) of the Mines (Working Facilities and Support) Act 1966 was governed by the value-to-owner and no-scheme principles. It depended on what Bocardo lost, rather than the benefit obtained by the licensee. Bocardo owned neither the petroleum nor a veto over access. Any key value arose entirely from the statutory scheme for exploiting the licensed petroleum and had to be disregarded. As no physical or amenity loss was proved, the Court of Appeal’s £1,000 award was generous and remained undisturbed.
5. Minority. Lord Hope and Lord Clarke considered that the land’s position above the reservoir’s apex gave it pre-existing key value. They would have confined any award to the additional petroleum recoverable through access to the apex and remitted quantum to the High Court.

1. United Kingdom Supreme Court: Bocardo’s damages appeal was dismissed by a majority of three to two. The respondents’ cross-appeal against liability in trespass was dismissed unanimously: [2010] UKSC 35.
2. Court of Appeal: The finding of trespass was affirmed, but damages were reduced to £1,000: [2009] EWCA Civ 579; [2009] 3 WLR 1010; [2010] Ch 100.
3. High Court, Chancery Division: Peter Smith J found trespass and awarded £621,180 plus interest, together with provision for continued trespass: [2008] EWHC 1756 (Ch); [2009] 1 All ER 517.