Loss Prevention Alerts

Loss Prevention Alert No 40

Drilling into Coal Authority Assets: a Review of the Coal Authority’s Terms and Conditions for Entering or Disturbing Coal Authority Mining Interests

This loss prevention alert has been produced by the Loss Prevention Working Group (LPWG) of the AGS.  It highlights issues that the LPWG considers may be of relevance to members.  It is not intended to provide a definitive response to any issues and before taking action members should consider carefully whether they need to seek independent legal advice.

Introduction

Under the Coal Industry Act 1994 ownership of coal (excluding coal in tips), coal mines (both current and disused) and coal mine shafts & adits, which were previously vested in British Coal, transferred to the Coal Authority (“the Authority”). Any activities which intersect, disturb or enter any of the Authority’s coal interests require the prior written permission of the Authority. Such activities include initial site investigation boreholes and any subsequent treatment of coal mine workings and coal mine entries for ground stability purposes.  An application for permission must be made at least 4 weeks prior to the commencement of works (2 weeks if expedited for an additional fee).  Failure to obtain permission for such activities is a trespass, with the potential for court action.

In order to obtain the Authority’s permission to enter or disturb its mining interests, the Applicant must fill in and submit the standard application form.  The Applicant must also agree to and sign the Authority’s standard terms and conditions which were updated on 1 February 2008.  The February 2008 terms are similar to, but more onerous than, the previous conditions.

The application form, guidance note and terms and conditions are available from the Authority’s website:  www.coal.gov.uk/services/permissions.

The AGS is concerned that, by signing the Authority’s Standard Terms and Conditions, its consultant and contractor members could be taking on liabilities which are wider and more onerous than they would ordinarily accept in their terms of appointment.

Who Should Sign the Terms and Conditions?

Most geotechnical and geoenvironmental engineering consultants and contractors would be unable to comply with many of the obligations imposed by the terms and conditions, such as:

Clause 1:          The obligation to take all steps necessary to prevent any person from accidentally falling into or interfering with any mine entry, borehole etc during the works.  This is an absolute obligation (i.e. one that is not qualified by the standard of reasonable skill and care) and inevitably requires the prevention of trespassers and vandals entering the relevant areas which will involve matters of site security for which the client, developer or principal contractor should be responsible.

Clause 2:          The absolute duty to ensure that nothing is deposited or makes it way into any mine entry or borehole etc which could block or weaken any underground excavations or cause or aggravate pollution of underground water or could cause any nuisance or harm to any persons or property.  Although the consultant/contractor would always be expected to design and/or carry out the works in such a way as to minimise these risks, the duty is ordinarily subject to the standard of reasonable skill and care.  The duty as expressed in this clause, will also involve issues of site security over which the consultant/contractor is unlikely to have any control.

Clause 5:          The Applicant must comply with all reasonable directions given by the Coal Authority which the Coal Authority believes necessary to safeguard its assets, the environment or public safety.  This clause is drafted widely and could include matters that are beyond the scope of the consultant/contractor’s expertise and/or their brief.

Clause 6:          An obligation to provide inspection facilities and to ensure that all permissions, consents and private or other rights are in place to entitle  the Authority to access the site.  Such matters are clearly for the client to arrange, via other professionals such as architects or lawyers if necessary.  Similarly, the obligation to provide a nominated site supervisor should rest with the party in ownership or control of the site.

Clause 13:         Bearing the costs of the application.

Clause 15:         The duty to obtain planning consent and to establish and protect any services on the site should rest with the client.

Clause 16:         Similarly, it is the client’s duty to obtain various consents from other mineral or land owners.

Clause 18:         The obligation to take a formal conveyance of any mine entry that the Authority considers is likely to increase its liabilities due to its proximity to the proposed development is an obligation that only the owner of the site could comply with.

Consequently, it is clear that the consultant/contractor should not sign the Authority’s terms and conditions and should not, therefore, be the Applicant.

Indemnity to the Authority

The terms and conditions impose onerous obligations and liabilities on the Applicant, although they are perhaps not unreasonable given the significant risks to public safety that could arise from the permitted activities.  The application procedure is designed to ensure that safety risks specific to the nature of coal and abandoned coal workings are identified and mitigated. These risks include the potential for:

• collapse of shallow mine workings;
• coal mining subsidence;
• the collapse of, or risks of entry to, mine entries including shafts and adits;
• Gas emissions from mines including methane and carbon dioxide;
• spontaneous combustion of coal which may lead to underground heating and production of carbon monoxide;
• transmission of gases to adjacent properties through underground pathways including ground fractures;
• water emissions from workings;  and
• pollution of underground water.

These risks must be assessed both in terms of how they may affect the land under investigation as well as the wider environment.

The terms and conditions transfer liability for any harm whatsoever arising out of the operations onto the Applicant.  This is achieved primarily by Clause 12 by which the Applicant agrees to indemnify the Authority for a period of 12 years (in the previous version of the terms and conditions this was only 6 years) “against liability for claims, losses or damages, including those made under the Coal Mining Subsidence Act 1991” (this is a new addition) which result from any failure by the Applicant or the Applicant’s contractors to comply with the requirements of the permission, or “as a result of any act, failure, inadequacy, omission, negligence or default by the Applicant or the Applicant’s contractors in designing or carrying out the work”.

Claims under the Coal Mining Subsidence Act 1991 are likely to be brought by the owners or tenants of adjacent properties that suffer subsidence damage or other nuisance as a result of the permitted activities and would consist of rebuild costs, cost of repairs or diminution in value of the property, damage to moveable property, the cost of alternative accommodation and other expenses, and legal and experts’ costs.  If the adjacent land is farmland or the site of a business, damages could include loss of profits.  Such claims can be brought within 6 years of the damage becoming apparent, which may be significantly later than 6 years from the relevant activities (this may explain the revision of the limitation period from 6 to 12 years in this latest version of the terms and conditions).

The terms and conditions as a whole contain a number of absolute obligations (i.e. those that are not qualified by the standard of reasonable skill and care) and Clause 12 provides that liability to indemnify the Authority may arise from “any act … in designing or carrying out the work”.  This means that the Applicant may have done all it reasonably or possibly could to prevent an incident occurring but will nevertheless have to indemnify the Authority in respect of any losses arising from any such incident. The Authority would be able to recover all its losses (even though those losses may not have been reasonably foreseeable) from the Applicant even though there had been no failure to exercise reasonable skill and care and such claims would, therefore, be very difficult for the Applicant to resist.  

The Role of the Consultant/Contractor

The Applicant will clearly need to rely on the consultant/contractor’s advice and/or performance in applying for permission (which requires submission of a detailed method statement and robust risk assessment) and in complying with some of the duties imposed by the terms and conditions, in particular:

Clause 2:          design and execution of the works in such a way so as not to block or weaken any underground excavations or cause/aggravate pollution of underground water, or cause nuisance.

Clause 3:          gas emissions monitoring and prevention of gas migration.

Clause 7:          advising on the method of treatment, design or specification of investigation works.

Clause 8:          taking account of the risk of unrecorded mine workings and disused mine entries (this clause prevents the consultant/contractor relying on the information provided by the Authority as to the location of its interests and the consultant/contractor may therefore have to undertake its own surveys).

Clause 9:          adopting appropriate practices and procedures for working and drilling in hazardous conditions and having the necessary experience to ensure competency.

Clause 10:         temporarily and then permanently sealing boreholes.

Clause 11:         compiling a written report summarising the works carried out.

The performance of these services should be governed by the terms of the consultant/contractor’s appointment and should be subject to the standard of reasonable skill and care. 

If they have been negligent, the consultant/contractor may be directly liable in tort to any third parties who suffer personal injury or damage to property as a result.  They may also be liable to prosecution by the Health & Safety Executive and/or the Environment Agency.  Such potential liabilities will be assessed according to the usual principles as set out in statute and decided law.

If the client (as the Applicant) is obliged to indemnify the Authority in respect of a claim, it may subsequently seek a contribution or indemnity from any consultants/contractors it considered to be responsible for the incident.  The scope of the potential recovery by the Applicant would depend on the terms of its contracts with its consultants/contractors.  The client may attempt to secure terms with its contractors/consultants that are “back-to-back” with the Applicant’s obligations to the Authority under the Terms and Conditions.  This should be resisted, if at all possible, because, as set out above, many of the obligations impose strict liabilities, which will not be covered by professional indemnity insurance and others require services that are not within the consultant’s/contractor’s areas of expertise.  Terms and conditions of appointment will need to be tailored to each project undertaken and consultants/contractors should always seek specific legal advice thereon. 

This Loss Prevention Alert is, of necessity, generic and is not intended to be a complete or comprehensive statement of the law, nor does it constitute legal or specialist advice.  It is intended only to highlight issues that may be of interest to AGS members.  Neither the writer, nor AGS, assumes any responsibility for any loss which may arise from accessing, or reliance on the material and disclaims all liability accordingly.  Professional advice should be taken before applying the content of the alert to particular circumstances.

Further information and advice is available through the AGS Legal Helpline.

Prepared for the Members of the AGS by Zita Mansi, BLM.