Bocardo SA v Star Energy Onshore Limited [2010] UKSC 35  

Star Energy was an oil company. It had established a drilling operation whereby a drill went into the ground on its land but in fact retrieved oil which was up to 2,900 feet beneath the surface of adjoining land owned by Bocardo.  

Bocardo claimed damages for trespass. At first instance, the judge found that there was a trespass and awarded substantial damages of over £600,000 based on the ransom value which Bocardo could have demanded in return for granting Star Energy the right to drill for oil under its land. Star Energy appealed to the Court of Appeal. The Court of Appeal agreed that the drilling did constitute a trespass but reduced the damages payable to just £1000. This was on the basis that Star Energy would have been entitled to compulsorily acquire the right to drill under Bocardo’s land by relying on certain statutory rights, for which it would only have had to pay nominal consideration. Bocardo appealed to the Supreme Court.  

The Supreme Court dismissed the appeal. It agreed that the drilling constituted a trespass and reaffirmed that a person’s ownership of land extends to the sub-strata and the minerals which form part of it. The Supreme Court did however accept that statements to the effect that ownership extends “to the centre of the Earth” went too far as there would come a point when physical features such as pressure or temperature rendered the concept of ownership absurd. On the question of damages, the Supreme Court also agreed with the Court of Appeal. The fact that Star Energy had a statutory right to acquire the right to drill at a very small price would clearly be relevant to the parties’ bargaining position and would have prevented Bocardo from extracting a ransom payment if the parties had engaged in a negotiation for the right to drill.