Homepace Ltd v Sita South East Ltd
| Jurisdiction | England & Wales |
| Judge | N. Strauss Q.C. |
| Judgment Date | 30 March 2007 |
| Neutral Citation | [2007] EWHC 629 (Ch) |
| Date | 30 March 2007 |
| Docket Number | Claim No. HC 06 CO 1139 |
| Court | Chancery Division |
[2007] EWHC 629 (Ch)
In the High Court of Justice
Chancery Division
Mr. N. Strauss Q.C. (sitting as a deputy judge of the Chancery Division)
Claim No. HC 06 CO 1139
Mr. Mark Wonnacott, instructed by Messrs. Bevan Brittan, appeared for the claimant.
Mr. Martin Hutchings, instructed by Clarks Legal, appeared for the defendant.
Approved judgment
Introduction and background
This Part 8 claim arises out of a 999 year lease dated 10th September 1996 of 107 acres of land known as Knockdown Quarry at Knockdown, near Tetbury, Gloucestershire, which was entered into between the claimant as lessor and Hughes Waste Management Limited as lessee. The lease was assigned to the defendant (then called A. and J. Bull Limited) in 1999. The defendant also carries on a waste management business.
The issue is whether the base rent of £100,000 per annum, referred to as “Certain Rent”, ceased to be payable in December 2005 on the service of a Minerals Exhaustion Certificate under clause 3.5.4 of the lease. This case raises again the much litigated question as to the circumstances in which the certificate of an independent third party can be set aside for mistake.
The lease was preceded by an agreement for lease dated 22nd May 1996, by clause 7 of which the lessee undertook (inter alia) to obtain planning consent(s) for the extension of the minerals extraction and waste activities on the land to (i) at least 10 metres below the maximum winter water table, (ii) the entire area of the land, (iii) the in filling of all excavated areas with commercial waste and (iv) the processing of waste materials brought on to the land for recycling. By clause 19, the terms and conditions of the agreement for lease continued in full force and effect notwithstanding completion of the lease.
Thus the basic purposes of the lease were to carry out quarrying activities and the landfill activities made possible by the quarrying activities, subject to further planning permissions to be obtained, which would no doubt contain conditions relating to these activities and to the subsequent restoration of the site.
At some time before 1996, some quarrying had occurred, and there were silent quarry workings in the northern part of the land. Planning permission had been granted on 27th November 1990 for quarrying activities on the southern part of the land, amounting to some 64 acres, but not below 114 metres AOD or 2 metres above the agreed winter water table level, whichever was the greater, unless a detailed scheme for working below these levels had been approved by the Mineral Planning Authority. The accompanying section 106 agreement limited extraction to not more than 100,000 tonnes of material per annum. The surface levels on the land ranged from 128 metres AOD in the north to 113 metres AOD in the south.
The terms of the lease
The lessor's rights under the lease were defined in the First Schedule, and included rights to quarry and excavate all Minerals in on or under the land and to dispose of them (§1), to open sink and make mines and quarries (§2), to tip waste materials from its operations on the land (§4), to bring on to the land extraneous waste (§5) and to do all that was necessary to extract store or otherwise develop the Minerals (§7). The Minerals are defined as “all minerals including limestone and clay deposits within the Land excluding.. the Reserved Minerals”.
The lessor's Reserved Rights are defined in the Second Schedule and (in so far as is relevant) they are in essence rights to excavate and exploit the Reserved Minerals, which are defined as
“Up to 12,000 tonnes in each year of this lease of limestone suitable for use as building walling and/or rockery stone and/or stone tiles and roofing slate”.
In a report prepared by Mr. Terence Smith, FRICS, FIQ, the claimant's mineral consultant, dated 16th March 2006, the minerals on the site are described as jurassic limestone suitable for the quarrying of building stone, with four layers as follows:—
(1) The top layer is finely bedded and suitable for making excellent roofing slates.
(2) The next bed is thicker and makes excellent walling stone.
(3) The third layer is a thicker bedded stone which can be split or sawn to produce a building stone.
(4) In the base of the quarry there are thicker beds suitable for cutting to produce ashlar or other masonary products, or to be sold in the market as block stone.
This description of the Minerals is not disputed, and accordingly it appears that the Reserved Minerals were 12,000 tonnes per annum of the first three layers.
Clause 3 defined the Certain Rent and Royalties. In effect, the lessee was to pay monthly a Minerals Royalty once Minerals had been extracted from the land, a Wayleave Royalty once materials for recycling were put on to the land and a Waste Royalty once waste was received for infilling activities, but was in any event liable for the Certain Rent of £100,000 p.a. payable monthly if this exceeded the Royalties. There was provision in clause 3.5.2 for recouping payments of Certain Rent in excess of the Royalties, if in later months Royalties exceeded Certain Rent.
Clause 3.5.4 provided as follows:—
“3.5.4 The Lessee's liability to pay the Certain Rent shall cease upon the exhaustion of all the reserves of Minerals in on or under the Land or upon those Minerals becoming economically irrecoverable and there being no reasonable prospect of them becoming economically recoverable within the next ten years PROVIDED THAT:
3.5.4.1 not less than twelve (12) months prior to the date on which the liability to pay the Certain Rent ceases the Lessee has served on the Lessor a notice in writing of its intention to cease payment of the Certain Rent which notice shall append a Surveyor's Minerals Exhaustion Certificate; and
3.5.4.2 if at any time after the Lessor's liability to pay the Certain Rent has ceased and during the subsistence of this Lease any Minerals are extracted at the Property the Lessor's liability to pay the Certain Rent shall resume upon the terms hereinbefore contained.”
The Surveyor was to be an independent chartered surveyor to be appointed by the parties, or in default of agreement by the President of the R.I.C.S. The 'Surveyor's Mineral Exhaustion Certificate” was defined as follows:—
“A certificate signed by the Surveyor which unequivocally confirms that all Minerals in on or under the Land are exhausted or are not economically recoverable and there is no reasonable prospect of them becoming economically recoverable within the next ten years.”
Clause 7 of the lease contained provisions governing the respective activities of the lessor and the lessee on the land, as follows:—
“Extraction of reserved minerals
In relation to the extraction of the Reserved Minerals the Lessee and the lessor covenant and agree and undertake with the other (as appropriate) and so that these covenants shall run with the Land and bind the parties hereto and their successors in title that at all times during the Term.
(1) The Lessor shall be entitled to extract and remove entirely for its own benefit the Reserved Minerals and exercise the rights granted in the Second Schedule without hindrance or interference from the Lessee provided that the lessor shall exercise the Reserved Rights in accordance with the relevant planning permission(s) licence(s) and statutory authorisations notified by the Lessee to the Lessor including (without prejudice to the foregoing) the Working Plan and the Lessor will observe the site rules made by the Lessee's site manager acting properly and reasonably in the course of his duties.
(2) The Lessor and the Lessee will work in compliance with the Working Plan and any reasonable directions of the Lessee's site manager and without prejudice to the Lessor's own working practices and programme of works the Lessor will upon request by the Lessee use all reasonable endeavours to extract within a reasonable period any Reserved Minerals from any part of the Land identified by the Lessee so as to enable the Lessee to comply with the Working Plan.
(3) The Lessor shall not permanently remove any Reserved Minerals from the Land without having first weighed and recorded them on the Lessee's weighbridge maintained under clause 5.8.
(4) The Lessor shall keep proper records of all Reserved Minerals removed from the land and shall permit the lessee to inspect the same on reasonable notice to the lessor and to take copies.
(5) The Lessee shall not agree with any relevant authority or body any draft working Plan containing provisions affecting the exercise of the Lessor's rights in respect of the extraction of Reserved Minerals without first obtaining the Lessor's prior written approval to those provisions which approval shall not be unreasonably withheld or delayed.
(6) The Lessor shall indemnify the Lessee against any outgoings charges or expenses in relation to the extraction of the Reserved Minerals.
(7) The Lessor and the Lessee each covenant with the other to use all reasonable endeavours not to interfere with or interrupt the other in its extraction of minerals from the Land and the parties shall wherever possible give the other reasonable notice of their intention to excavate minerals from a particular part of the Land having regard to the operations of the other.
(8) The Lessor and the Lessee each covenant with the other to use all reasonable endeavours not to cause any damage to any minerals being excavated having been excavated or capable of being excavated by the other.
(9) The Lessee shall exercise reasonable endeavours not to use the Land or deal with the Minerals so as to prejudice the commercial operation of that part of the Lessor's business which is based on the exercise of the Reserved Rights.
(10) If a dispute shall...
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Homepace Ltd v Sita South East Ltd
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