The Supreme Court has rejected a damages claim by two mineral exploration companies arising from an unlawful mining ban adopted by Mayo County Council, despite accepting that the council had acted unreasonably.
Glencar Exploration Plc and Andaman Resources Plc held prospecting licences covering an area south of Westport and had spent £1.94 million exploring for gold. In November 1991 they entered a joint venture with Australian producer Newcrest Mining Ltd, which was to invest at least £1.6 million in further exploration.
Mayo County Council subsequently incorporated a prohibition on mining across an area of more than 300 square miles into its development plan in February 1992. The companies alleged that Newcrest withdrew from the venture because of that decision.
In 1992, the High Court declared the mining ban ultra vires, or outside the council's legal powers. The companies later pursued damages for negligence, breach of statutory duty, legitimate expectation and interference with constitutional rights.
A second High Court judgment dismissed those claims. Although Mr Justice Kelly found that the council had acted negligently in the sense that no reasonable authority would have adopted the ban in the circumstances, he held that this did not amount to actionable negligence.
Chief Justice Keane agreed. He held that foreseeable financial loss was not enough to create a duty of care. The council's planning powers were exercised for the community generally, rather than for a defined class such as prospecting licence holders, and there was insufficient legal proximity between the parties.
The Supreme Court also rejected the claims based on breach of statutory duty and legitimate expectation. The unlawful planning restriction had already been removed by the earlier High Court decision, and the companies had never applied for planning permission.
The court therefore dismissed the appeal and affirmed the High Court order refusing damages.