Most household building policies – and occasionally commercial policies – provide cover for subsidence damage to buildings. Where the subsidence is caused by coal mining operations, statutory and other remedies exist, whereby underwriters can legitimately seek recovery of their outlay.
Solicitors Kent Jones and Done (KJD) is based in Stoke-on-Trent in the heart of the Staffordshire coalfields. The area has experienced
extensive coal-mining activity, resulting in a plethora of underground workings which have caused subsidence damage. What are the remedies available to underwriters that have settled subsidence claims resulting from coal-mining activities?
The principal remedy is contained in the Coal-mining Subsidence Act 1991. Under the act, the “responsible person” (who is either the coal authority or a licensed operator) has a duty to take remedial action for coal-mining subsidence damage, which includes: execution of remedial works, making a payment in lieu of the cost of such works and making a payment for the depreciation in value of the property.
Accordingly, where underwriters have either paid out to execute repairs or have an existing obligation to do so, a claim can be made against the responsible person. This can be done either under normal subrogation rights or under the act itself, as a person who is liable to make good the damage. It is critical, however, to ensure that claims are pursued promptly and a damage notice is served in the required form.
The time frame
The damage notice must be served within six years of the date when the claimant first had “knowledge” for bringing a claim. This means knowledge that damage has occurred, and that the nature of the damage is such as to indicate it may have been caused by subsidence.
However, “knowledge” also includes that which might reasonably have been acquired from facts that were observable or ascertainable, or which would have been ascertained with the help of expert advice which it was reasonable to seek.
What is important to appreciate is that the timing of this six-year period does not begin with either the commencement or cessation of the coal-mining operations. It is solely restricted to the issue of damage. For example, KJD recently successfully acted in an action relating to coal-mining operations that took place in the latter part of the last century. However, the damage did not actually materialise until the mid-1990s, some 100 years later.
Following the service of a damage notice, the responsible person must state whether they consider they have a remedial obligation. If they acknowledge the obligation, they must also serve notice, stating the kind of remedial actions that are available to meet it and, if more than one, which they propose to take.
The act then sets out a series of procedures to be followed for the remedial action to be effected. Often this involves the carrying out of repairs. Alternatively, the responsible person can elect to make a payment in lieu. However, where the aggregate cost of remedial works exceeds the depreciation in value of the damaged property by more than 20%, the responsible person may choose to make a payment equal to the amount of depreciation caused.
In certain circumstances, the damage itself may be irremediable. This often occurs in the case of tilt. If repairs cannot practically be executed, the responsible person is obliged to make a depreciation payment equivalent to the difference in value of the property pre and post-damage.
The remedies described above all relate to the subsidence damage itself, but what about the other costs that underwriters may have incurred and how can they be recovered?
In certain circumstances, payments are claimable under the act for the cost of reasonable alternative accommodation (where required) and removal expenses. Where the provision of alternative accommodation is necessary, a claim can also be made for any other household expenses reasonably incurred, which are in excess of the aggregate that would usually have been incurred had there been no subsidence damage. Provisions also exist in relation to conse-quential loss, but this only applies to small firms.
One type of damage that cannot be claimed for is damage that only relates to the gradient of land, which does not affect its fitness for use for the purpose for which it was used immediately before the subsidence event occurred. A useful comparison here is a golf course fairway (where the fitness may be unaffected) and a cricket wicket (where clearly it would).
Making a claim under the act can be complicated, particularly where the responsible person disputes the amount of damage or that the damage is covered by the act at all. There is therefore provision in the act for the reimbursement of expenses reasonably incurred in the preparation and prosecution of the damage notice. This can cover experts fees, such as coal-mining consultants and legal fees.
Arguing your case
What happens if the responsible person rejects a claim on the basis that the damage is not coal-mining subsidence damage? Here, the provisions of the act are of major assistance to the claimant. Under the act, where the circumstances are such as to indicate that the damage may be the result of subsidence, the onus is on the responsible person to show that the damage is not subsidence-related, rather than on the claimant. The usual burden of proof is therefore reversed. Rejection of liability on this ground is very common, but not always sustainable.
If the claim does become contentious, there are arbitration schemes, known as the general and householders' schemes, to assist the economic resolution of such disputes. Both schemes have their own rules, but generally no costs are recoverable under the householders' scheme.
Alternatively, the matter can be referred to the Lands Tribunal. Claims have to be brought within three years of the earliest date on which the responsible person is in breach of their remedial obligation or within the six-year period for serving the damage notice, whichever is the latter.
In addition to claims under the act, there may be circumstances where claims can be made under the title deeds of the affected property and/or under the provisions of the Mines (Working Facilities and Support) Acts of 1966 and 1974, though these are beyond the scope of this article.