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BP Petroleum Developments Ltd v Ryder and others

Legal

by

Joanne Tenhave
1987-06-17
(Before Mr Justice Peter GIBSON)
[1987] 2 EGLR 233

Mines (Working Facilities and Support) Act 1966 — First application under Act in respect of the exploitation of petroleum — Application by BP Petroleum Developments Ltd as plaintiffs for grant of rights, additional to those already granted by private arrangement, to exploit the on-shore oilfield on defendants’ estate, which included Wytch Farm, Dorset — Consideration of issues, of general interest to oil industry and to landowners, in relation to conditions for the grant of such rights and the basis of compensation — After examining the statutory background, the judge decided that the four essential statutory conditions had been satisfied by the plaintiffs, namely, (1) that the rights were sought for the purposes contemplated by the production licence, (2) that the efficient exploitation of the petroleum was unduly hampered by the plaintiffs’ inability to obtain these rights, (3) that the grant of the rights was expedient in the national interest, and (4) that it was not reasonably practicable to obtain the rights by private arrangement — As regards the basis of compensation, the plaintiffs submitted that the compensation awarded under section 8 of the 1966 Act ought to be on the compulsory acquisition basis of the existing use value of the land rights (but with regard to legitimate potentialities) plus sums for injurious affection and disturbance — In addition section 8 specifically allowed at least a further 10% on account of the application being compulsory, but case law made it clear that account could not be taken of the power of veto which a landowner would have in the absence of compulsory powers — The basic principle of compensation should be the loss to the vendor, not the value to the purchaser, although the presence in the market of a special purchaser for whom the rights would have a particular value could be taken into account — The defendant landowners, on the other hand, submitted that the compensation should take account of the profits, likely to be large, which the plaintiffs would derive from their exploitation of the rights — Held by Peter Gibson J, after considering a number of authorities on the 1966 Act as well as case law on the general principles of compensation, that the correct basis was consistent with the judicial interpretation given to the Lands Clauses Consolidation Act 1845 in the cases to which it applied — This was the value of what the estate would lose by the enforced grant, namely, the rights over land having its existing agricultural and forestry use plus compensation for disturbance and injurious affection — The judgment works out in detail the calculation of the amounts payable in accordance with the above principles.

In a
supplementary judgment dealing with costs the judge applied the specific
provisions in section 3(2)(c) of the Petroleum Production Act 1934 — These were
that costs incurred by applicants for rights were not to be paid by the
landowners from whom the rights were sought; and that costs incurred by the
landowners were to be paid by the applicants unless the applicants had made an
unconditional offer equal to or greater than the amount awarded by the court —
In the present case the relevant offer by the plaintiffs was in fact much
greater than the court’s award — Held that the offer was unconditional within
the meaning of section 3(2)(c), despite some initially unquantified sums which
would become quantified on acceptance and despite being an offer ‘without
prejudice save as to costs’ — Accordingly all costs up to the receipt of the
offer would be borne by the plaintiffs and each party would bear their own
costs after that date with the exception of costs of an unsuccessful
interlocutory appeal by the plaintiffs, which would be borne by them

The following
cases have been referred to in this report.

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