In the High Court Costello J. (as he then was) reviewed the relevant authorities and reached the following conclusions concerning the principles to be applied:-
The decision of Costello J. was appealed to the Supreme Court. The appeal was dismissed. In the course of his judgment, Henchy J. having found that the Local Authority were plainly in breach of their public duty went on to say:-
McCarthy J. in the course of his lengthy judgment indicated that whilst Costello J. had rested his conclusion on the "fair and reasonable test", he preferred to express the duty as one arising from "the proximity of the parties, the foreseeabililty of the damage and the absence of any compelling exemption based on public policy" . On the duty of care he said (at p. 351):-
In seeking to apply these principles to this case, there must be weighed heavily in the scales against the Applicants the fact that the statutory powers which were conferred and operated here are in my view ones which were to be operated for the benefit of the public at large. They were not directed towards a particular class or group of persons of which the Applicants are a member. That of course is not necessarily the end of the matter if it can be shown that a duty of care arose not from the statute per se but from the relationship between the parties. Whether one adopts the "fair and reasonable test" preferred by Costello J. or the "proximity of the parties, foreseeability of the damage and the absence of any compelling exemption based on public policy" test preferred by McCarthy J., in my view the answer in this case is the same.
It would be neither fair nor reasonable nor would the proximity of the parties suggest that there was any duty of care extant between the Respondent and the Applicants when the mining ban was imposed. The Applicants were not even then applicants for a planning permission and indeed there was no guarantee that they would ever become so. The most that can be said of them were that they were prospectors who had a hope, nay even an expectation of being applicants for planning permission at some stage in the future. It is indeed true that they had made representations to the Respondent seeking to avoid the imposition of the ban and pointing out that they would sue in respect of any loss which they might sustain as a result of it. But that of itself does not appear to me to give rise to a proximity in the legal sense which would result in an entitlement to damages for a negligent act. Accordingly, I have come to the conclusion that the purported exercise of the statutory powers in question by the Respondent was not one which gave rise to a duty of care in the law of torts at the suit of the Applicants against the Respondent.
The claim which is made here is that some legitimate expectation of the Applicants was frustrated by the Respondent thereby giving rise to an entitlement to damages. When asked to identify precisely what legitimate expectation the Applicants were relying on and what exactly it was alleged the Respondent did to generate that expectation, they replied as follows:-
Just like the topic which I discussed in the immediately preceding part of this judgment, legitimate expectation has hosted a large number of decisions in varying jurisdictions, not all of them easy to reconcile one with the other.
Happily, I may confine myself to an examination of the law in this jurisdiction with a view to ascertaining whether or not the Applicants have made out a case under this heading.
The starting point for any such examination must be the decision of the Supreme Court in Webb v. Ireland [1988] IR 353 . Finlay C.J. said this (at p. 384):-
Later in his judgment Finlay C.J. said:-
There are a number of important matters to bear in mind when reading the aforesaid passages. No statutory powers of the State were involved in the case. A positive assurance had been given to Mr. Webb as to how he would be treated. The case concerned itself with substantive rather than procedural rights. Finally, its roots were firmly planted in the soil of promissory estoppel.
There have been many cases decided subsequent to Webb in this jurisdiction. Some seek to confine the application of the principle to the area of procedural rather than substantive rights. This is so particularly where a conflict might arise between the granting of a substantive right and the principle that the beneficiary of a statutory power may not fetter his freedom to exercise that power by estoppel.
Of the subsequent decisions in this Court, the one which I find to be of greatest assistance to me is that of Costello J., as he then was, in Tara Prospecting Limited and Another v. Minister for Energy, Ireland and the Attorney General [1993] ILRM 771.
The case is remarkable because it is dealing with the same subject as this one, namely, gold mining in County Mayo. The Minister granted prospecting licences in 1981 and 1984 to Tara in respect of areas which included Croagh Patrick. Letters from the Minister made it clear that the renewal of these licences would be conditional on certain matters such as Tara's work commitments. Tara and the second named applicant in that case, Burmin, entered into a joint venture agreement. Gold was found in the Croagh Patrick area. There was much public opposition to their mining proposals. Efforts were made to use planning legislation to block any mining in the area. There was also opposition on religious grounds as Croagh Patrick is a traditional place of pilgrimage. The problems were discussed between the prospecting companies and the Department of Energy. The Minister announced in May 1990 that he had decided to use his powers under Section 12 of the Minerals Development Act, 1940 to exclude Croagh Patrick from the prospecting licence because of the unique importance of it as a pilgrim site, a part of the national, cultural and religious heritage.
The Minister conveyed his decision to the applicants and excluded any further prospecting licences in respect of that mountain. He also clearly implied that no State mining lease would ever be granted in the excluded areas. A challenge was brought to the Minister's decision on the basis that it was ultra vires. It was also said that it was in breach of the principles of natural and constitutional justice and contrary to the legitimate expectations which the Minister had caused the applicants to entertain in relation to the licences sought.
Costello J. rejected the challenge to the Minister's decision and dismissed the claim for Judicial Review. In the course of his judgment on the topic of legitimate expectation he said the following (at p. 783):-
Costello J. then went on to consider authorities both in the United Kingdom and in Australia, together with a number of further Irish authorities. It is not necessary for me to rehearse what he had to say concerning those cases and I confine myself to the conclusions which he drew. He said (at p. 788):-
The observations which I have just quoted from these two judgments must be borne in mind when examining the assertions made by the Applicants as to legitimate expectation (which I have already reproduced in this part of the judgment) and the evidence in the case. There is neither allegation nor evidence supporting any promise, express or implied, on the part of the Respondent. It was never represented to the Applicants that they would obtain planning permission. Furthermore, the Applicants could not, in my view, have had a legitimate expectation that planning permission would be given for mining even in the absence of the mining ban. In fact, the evidence suggests that great difficulties would be encountered even in getting to the stage of making an application for planning permission never mind the actual obtaining of such permission. Just as the applicants in the Tara case, from which I have already quoted, had no legitimate expectation that their exploration licences would be renewed by the Minister, neither, in my view, can there be any legal basis for holding that the Applicants in this case had a legitimate expectation that planning permission would be granted. It is only on that basis that a claim for damages could succeed for reasons which I will explain when I come to the question of damages.
The only possible legitimate expectation which the Applicants might have had was that if they applied for planning permission they would get a fair hearing. Indeed, after the judgment of Blayney J. there were never even informal overtures made to the Respondent on this topic. These Applicants were nowhere near even making a decision in principle as to whether it would be commercially feasible to apply for planning permission.
I am of opinion that none of the ingredients required in order to mount a successful claim for the existence of a legitimate expectation have been made out in this case. It seems to me that it is an attempt to carry this doctrine to a distance never achieved before and probably not contemplated by the Supreme Court in Webb . The views of O'Hanlon J. in Association of General Practitioners Limited v. Minister for Health [1995] 1 IR 382 have much to recommend them where he said that if a plea of legitimate expectation were "allowed its head" it could "introduce an unwelcome element of uncertainty into well defined law concerning rights of property, rights of contract and other matters" .
Even if I am wrong in the view which I have come to as to the existence of a legitimate expectation not having been established, I am of opinion that damages would not be available for its breach in the absence of a subsisting contractual or equivalent relationship. The cases in which damages have been awarded such as Webb , or Duggan v. An Taoiseach [1989] ILRM 710 are distinguishable from this case because the applicants there were in long-term contractual or equivalent relationships with the respondents and the wrongs done were akin to a breach of contract. There is no such equivalent relationship between the parties to this litigation.
Reliance was placed on the decision of Blayney J. in Ahern v. Kerry County Council [1988] ILRM 392 to support the Applicants' case but I derive no help from that since Blayney J. expressly refused to express a conclusion on the point that might help the Applicants.
Accordingly, I reject the claim which is made here on the basis of a legitimate expectation having been defeated. I hold that there was no legitimate expectation such as is contended for and even if there was, damages would not be available as a remedy in respect of it because of the absence of a contractual or similar relationship between the parties. In fact, the relationship between the parties here was no more than one of planning authority and prospective applicant for planning permission.
The final claim which is advanced by the Applicants is one which alleges that their property rights under the Constitution have been unlawfully interfered with. They say that in such an event they should be entitled to damages. These rights have allegedly been unjustly attacked and their value has been damaged to a significant extent by the unlawful acts of a State authority. In the course of their written closing submissions, the Applicants elided the issue of legitimate expectation with their claim in respect of constitutional rights. They said this:-
This seems to me to go considerably further than what is warranted by the jurisprudence or justified in principle.
The property rights of the Applicants here were confined to licences from the Minister for Energy to enable them to prospect. True it is that if the Minister was satisfied as to the results of that prospecting, a mining lease might well have been expected. But even then the development of a mine would of course be subject to the obtaining of planning permission. It seems to me that the prospecting licence was the only matter which they had as of right at the time that this ban was imposed. Their enjoyment of that was not jeopardised save in a most indirect way in that their joint venture partners pulled out. This is certainly very far from a case of any form of direct interference with or expropriation of the property right such as it was.
The property right in respect of the licence must be seen in context. A prospecting licence is of itself of little value even though substantial sums of money may be sunk on foot of it in exploration. It becomes of substantial commercial value only when a return can be achieved from it. The evidence in the present case is that before one could get to that stage, a huge amount of additional work would have had to be done with uncertain results, a mining lease procured and a planning permission obtained. The mine would then have to be put into operation and a profit derived from it. It is only at that stage that one could speak in any realistic way of a commercial value attaching to the prospecting licence.
In these circumstances, I have come to the conclusion that no case for damages has been made out in respect of an alleged interference with the Applicants' constitutional property rights.
As is clear from the views that I have already expressed, the Applicants fail in this claim for damages. Lest, however, I am wrong in all or any of the views which I have expressed to date, I will proceed to state my conclusions on the question of damages. The claim which is made is for the full sum expended by the Applicants on prospecting in the areas affected by the ban. It comes to just short of £2 million. They seek to be recompensed in the entirety of that sum by the Respondent. They assert that in assessing damages the Court should do so as of the date upon which the ban was imposed rather than the date of trial. The importance of this submission will become clear in a moment.
As is clear from the evidence, prospecting for gold is a high risk enterprise. It is speculative. It is uncertain. On Mr. McCullough's own evidence, the prospects of success in mining projects on average is one out of one hundred. In the present case he said that they had established that there was gold in very significant quantities present and that figure was reduced to more like one in ten or somewhere in that region. Accordingly, at the time when the ban was imposed, there was only a one in ten prospect that the gold found was going to be what he described a commercial deposit. Even assuming that such a commercial deposit was found at the end of all of the prospecting, planning permission would then have to be sought for the mine and in my view that was never going to be easy. One then has to postulate that if planning permission were granted, the mine would then be established. One must then assume that it would trade profitably. It is only at that stage that a return of the original monies expended in prospecting would be likely to be recovered.
In these circumstances, it seems to me that even if the Applicants were wholly successful on the question of liability, before any damages could be awarded to them they would have to demonstrate, on the balance of probabilities, that their venture would have been successful and would at least have yielded amounts sufficient to recoup the expenditure made. No such evidence was forthcoming. Indeed, Mr. McCullough's own estimate of a one in ten chance of a commercial deposit being found speaks for itself. In the light of this, it appears to me to be a bold claim to seek to recover from the Respondent the entire sum expended. To award damages in the amount claimed would in effect constitute the Respondent as a form of insurer for expenditure incurred which on the balance of probabilities would never have be recovered.
I accept that the evidence of gold was promising but it only demonstrated a one in ten chance of a commercial deposit being found. That means that there was a nine in ten chance that the money expended would never have been recovered but rather would have been lost. To make an award of damages in these circumstances would seem to me to be perverse since the Applicants have not demonstrated on the balance of probabilities that these monies would ever have been recoverable by them. If I were to award them the sum claimed they would have recovered the entire expenditure made by them which, if no wrong had been done to them, they had at best a one in ten chance of recovering in any event.
If I am incorrect in the views which I have just expressed, it seems to me that putting the Applicants' case at its highest, the most that they could hope to recover given the probabilities set forth in evidence by Mr. McCullagh would be one-tenth of the expenditure incurred, namely, £193,826.40. That would be the sum recoverable if damages were assessed as of the date of the mining ban. If, however, the date of trial was the more appropriate date, I am satisfied that it would have to be reduced even further. I have already indicated that the prospects of obtaining planning permission were not very good but in the light of the evidence which I had concerning the European Union Habitat Directive, I am satisfied that the prospects of obtaining planning permission would have diminished even further by the time it might be applied for. At most, it appears to me that the Applicants could hope to recover only one-twentieth of the expenditure. However, in the light of the views which I have already expressed, this is not a case in which damages should be awarded and consequently this claim is dismissed.