Indirect Loss Not Actionable

When subsidence occurs, it presents homeowners with a dreadful problem and it is relatively common in areas that have a history of mining operations. Accordingly, the Coal Authority has an obligation in some circumstances to pay compensation for subsidence caused to properties affected by past coal mining activity.

In a recent case, an arbitrator ruled that the Authority was liable to the owners of two properties and ordered it to buy them from their owners. The properties were alleged to be unsaleable, not because they themselves suffered from significant subsidence, but because of the effect of subsidence on nearby properties.

The Coal Authority referred the decision to the High Court, arguing that since there was no actionable damage to the claimants’ properties, the arbitrator did not have the power to make an award.

The Court agreed. Under the Coal Mining Subsidence Act 1991, for a claim for compensation to succeed, there had to be physical damage caused by subsidence. A claim for economic loss could not be made.

The arbitrator had erred because he had addressed the wrong problem. The question that should have been asked was whether or not the claimants had suffered an economic loss caused by subsidence to their properties.

Coal Authority v Davidson and Davidson EWHC [2008] 2180 [TCC]. See http://www.bailii.org/ew/cases/EWHC/TCC/2008/2180.html.

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