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Can you forfeit a mining lease under new COVID-19 measures? 

The government’s moratorium on the forfeiture of business leases in the recently passed Coronavirus Act 2020 does not apply to mining leases. Under the 2020 Act, commercial landlords’ forfeiture rights for non-payment of rent have been suspended until at least 30 June. 

However, certain tenancy types are excluded from the 1954 Act’s scope entirely. As such, tenants under those leases do not benefit from the ban on forfeiture for non-payment of rent contained in the 2020 Act. 

Excluded tenancies include mining leases, as well as certain agricultural tenancies, some short term leases of six months or less and leases used to grant code rights under the electronic communications code. 

A mining lease is a lease for any of the following purposes:

  • sinking and searching for,
  • winning, 
  • working, 
  • getting, 
  • making merchantable, 
  • smelting or otherwise converting or working for the purposes of any manufacture,
  • carrying away, and 
  • disposing of

mines and minerals, in or under land, and

  • the erection of buildings, and
  • the execution of engineering and other works 

suitable for those purposes.

It is not clear whether the government intended to omit mining leases from the forfeiture moratorium or if this is an unintended quirk of the interaction between the 1954 and 2020 Acts. 

Does this mean that landlords of mining leases can forfeit for non-payment of rent?

Whilst mining leases are excluded from the forfeiture moratorium in respect of non-payment of rent in the 2020 Act, in practice landlords will not be able to take possession proceedings during the current crisis.  On 26 March 2020 a new Practice Direction was introduced by the Master of the Rolls. The effect of this is that all proceedings for possession, as well as enforcement of any possession orders, will be stayed for a period 90 days.  

This means that, whilst they do not benefit from the moratorium on forfeiture in the 2020 Act, minerals leases will benefit from the 90 day stay, and landlords will not be able to obtain possession.

This issue will be of more importance to those operators whose terms are not based on royalty payments or where there is a minimum royalty.  
TLT has dedicated Real Estate and Planning and Environment lawyers and can help you navigate any minerals or COVID-19 related issue. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions.

 

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