Summary

Michael Driscoll QC and Ciaran Keller, who did not appear below, appeared for the successful appellants, Star Energy, in a landmark decision in the Court of Appeal against Mr Al Fayad’s company Bocardo SA. Bocardo had succeeded before Peter Smith J in obtaining an order that required Star Energy to pay 9% of the gross revenue from an oil field below its Oxted Estate which had been drilled using deviational wells which entered the substrata below the surface of Bocardo’s land but several hundreds of feet beneath the surface. The wells did not interfere with Bocardo’s enjoyment of the surface one iota. The damages awarded to Bocardo by Peter Smith J meant that Bocardo would receive more of the revenue from the oil field than was payable to the Crown, from whom Star Energy held a licence, even though the Crown owned the oil and Bocardo did not.

Facts

This is probably the first time that the Court of Appeal has had to consider this question in the context of a dispute as to the applicability of the maxim. In reaching their decision on damages the Court of Appeal approved an earlier decision of Peter Gibson J in BP v Ryder, in 1987, which Peter Smith J, in his judgment, had previously expressed the view to have been wrongly decided.

Held

The Court of Appeal set aside the order of Peter Smith J and awarded Bocardo damages of only £1000 for the past and all future trespass caused by the wells. Bocardo was ordered to repay the far more substantial sums which it had been recovered by way of damages under the order of Peter Smith J and 80% of the costs below and 100% of the costs of the appeal together with the sum of £500,000 on account of those costs. In reaching their decision on damages the Court of Appeal had to consider the question of how far the title of a surface owner extended below the surface and whether the maxim that the surface owner owned down to the middle of the earth had any application.