The Supreme Court has rejected claims for damages by two mining companies whose County Mayo exploration project collapsed after the county council adopted a development-plan policy later ruled to be beyond its legal powers.
Glencar Exploration plc and Andaman Resources plc held mineral prospecting licences in Mayo and had spent about £2 million exploring deposits which included commercially significant gold. In 1991, Australian producer Newcrest Mining Limited agreed to invest £1.6 million for a 51% interest in the venture.
Mayo County Council subsequently adopted a 1992 development-plan provision effectively banning mining across an area of about 300 square miles, including the licensed lands. Newcrest withdrew and the project became commercially worthless.
The companies successfully challenged the mining ban. In November 1992, the High Court held that the council had acted outside its statutory powers and annulled the policy. They then sought damages for their lost investment.
Mr Justice Fennelly held that the invalidity of a public decision does not, by itself, create a right to compensation. A claimant must still establish a recognised civil wrong such as negligence, breach of statutory duty or another actionable cause.
The court rejected the companies’ negligence case. Although the council knew the businesses would be affected, they had no direct legal relationship with it. Their prospecting licences came from the State and they belonged to a wider class of mining interests potentially affected by planning policy. The council therefore owed them no duty of care to ensure that its development-plan decision was legally valid or to obtain further legal advice before adopting it.
The breach-of-statutory-duty claim also failed because the planning legislation imposed duties for the public benefit, not for the protection of an identifiable class including the companies.
The court further rejected the legitimate-expectation argument. There had been no promise, representation or undertaking by the council that mining permission would be granted or that a particular policy would be maintained.
The appeal was dismissed.