Cleveland Potash v Drummond: High Court rejects wayleave royalty demand at Boulby mine

The High Court has ruled against the mineral rights holder at Boulby mine in a significant decision concerning the terms on which working facility orders may be granted under the Mines (Working Facilities and Support) Act 1966, finding that a demand for a royalty-linked wayleave was unreasonable and that compensation should instead be based on a certain rent with free passage.

Master Kaye, sitting as a Deputy High Court Judge, handed down judgement on 22 May 2026 in Cleveland Potash Limited v The Honourable Mrs Ferelith Drummond & Ors [2026] EWHC 1182 (Ch), following a three-day trial last July. Cleveland Potash Limited (CPL), operator of Boulby mine in North Yorkshire, the world's only active polyhalite producer, sought compulsory ancillary rights after failing to agree new lease terms with the respondents upon expiry of the original 50-year onshore leases.

Compulsory purchase principles: Bocardo confined to petroleum

CPL argued that compensation under section 8(2) of the 1966 Act should be assessed by reference to compulsory purchase principles, including the Pointe Gourde no-scheme rule, relying on the Supreme Court's decision in Bocardo SA v Star Energy UK Onshore Ltd [2010] UKSC 35. The court rejected that submission, holding that Bocardo was decided squarely in the context of the Petroleum (Production) Act 1934, which expressly imports compulsory purchase principles and a 10 per cent uplift into the 1966 Act mechanism. No such importation applies to non-nationalised minerals such as polyhalite. Parliament's deliberate choice to include that provision only in the 1934 Act was, the court found, determinative.

No key value: the jigsaw analysis

Although the court declined to apply compulsory purchase principles, it went on to consider, in the alternative, whether the first respondent held "key value" sufficient to displace the Pointe Gourde disregard. Drawing on extensive factual evidence, Master Kaye concluded that no single interest holder controlled the scheme for exploiting offshore polyhalite. CPL's freehold of the 32-hectare mine site, its ownership of areas 7 and 50, nineteen new onshore leases, and its Crown Estate offshore lease together formed an indivisible jigsaw. The first respondent was one piece of that puzzle, not the key to it.

On shaft ownership, the court rejected the argument that the exception and reservation in the 1946 conveyance conferred on the first respondent a freehold interest in the entirety of the shafts. Her interest extended to the reserved mineral strata and the voids created by working those minerals, but no further.

Wayleave demand found unreasonable

Turning to valuation, the court preferred the evidence of CPL's expert, Mrs Jane Iwanicki, over that of the respondents' expert, Mr Timothy Troman. The latter's proposal, a wayleave royalty of 0.5 per cent of net mine realisation based on an assumed full market royalty of 2.5 per cent NMR, was found to lack credible evidential foundation. Key assumptions, including the extent of the first respondent's control over access routes and the significance of her shaft interests, had not been updated between his 2019 valuation and his 2024 expert report, and several material factors, among them CPL's acquisition of areas 7 and 50 and the extraction royalty arising from construction of the new salt roadway, were unaccounted for.

The court also noted that a consistent body of evidence from Boulby's own 50-year history and from the vast Woodsmith polyhalite project demonstrated that certain rent with free passage, not underground wayleaves, represents established custom and practice for mineral leases in the region.

CPL's proposed certain rent of approximately £56,000 per annum with an extraction royalty and free passage was determined to be fair and reasonable compensation under section 8(2) of the 1966 Act. The parties are expected to finalise lease terms by negotiation following the consequentials hearing.