Local authority – Pier – Closure – Company taking tenancy of pier to operate amusement arcade – Freeholder having repairing obligations regarding structure of pier – Defendant local authority closing pier for repair work – Company seeking damages for loss of profit and diminution of business – Company going into liquidation – Liquidator assigning claim to claimant company – Whether defendants liable to claimant for compensation – Whether claimant being in default for purposes of section 106 of Building Act 1984 – Claim allowed
The freehold owner of Hastings Pier (R) granted leases of two units on the pier to a company (S) to carry on its business as the operator of a bingo hall and an amusement arcade. The premises included the ceilings and floors and floor finishes but not the structural members in the roof or supporting the floors of the premises. Under schedules to the leases, S had rights to pass over the common parts of the pier. R had repairing obligations in respect of structure of the pier in so far as any such matters did not fall to be performed by S or any other tenants. It was common ground that neither S nor any other tenants had relevant repairing obligations.
In about 2004, S became concerned about the structural integrity of the pier and commissioned a full structural engineering survey. The resulting report was provided to R by S in an attempt to make it carry out the repairing obligations under the leases. In January 2005 that report was provided to the defendant local authority in an effort to persuade them to act to require R to carry out the necessary repairs and maintenance.
On 16 June 2006 the defendants gave notice by letter to the pier tenants that they were exercising their powers under section 78 of the Building Act 1984 to close the pier from the main entrance building onwards, including S’s premises from 4.00 pm on that date. S brought a claim under section 106 of the 1984 Act, seeking compensation for loss of profit and diminution in the value of its business by reason of the exercise by the defendants of their powers under the Act. In January 2012, S went into administration and the liquidator assigned all its claims to the claimant.
An issue arose whether the defendants were liable to the claimant to provide compensation under section 106. The defendants argued, inter alia, that the claimant had failed to show that the claim arose from an action which, but for the defendants’ statutory power, would be actionable in tort by the claimant. The defendants’ action had been a lawful, necessary and proportionate response to the claimant’s breach of duty of care to visiting members of the public. Moreover, the claimant had been “in default” within section 106.
Held: The claim was allowed.
(1) The purpose of the statutory remedy in section 106 was to provide redress where it would otherwise not be available because of the defence of “statutory authority” and on the basis of a test of “unreasonableness” as a necessary ingredient of nuisance on the highway. The defendants’ reliance on the absence of a cause of action because, for instance, the tort of private nuisance required a defendant to have acted unreasonably which was not the case in relation to the defendants’ action here, was to take matters into account which were not relevant to the question of whether a private individual interfering with access would give rise to a good cause of action. The same applied to the defence of necessity.
A cause of action in private or public nuisance or interference with the right of access to premises adjoining a highway would arise where a person was prevented from being able to access premises. This case was one where there was interference with access to premises adjoining the highway. The interference with access from the public highway in the present case prevented all access to the premises by visitors both by the notice dated 16 June 2006 and by barriers being put up. This was a case where, if a private individual had interfered with access, as the defendants did, there would have been a good cause of action for loss suffered: Lingké v Christchurch Corporation [1912] 3 KB 595 and Leonidis v Thames Water Authority [1978] 11 BLR 16 applied.
(2) Section 106 of the 1984 Act was a provision which gave compensation for the exercise of powers by a local authority and the intention of the legislator would have been to prevent a party from recovering when that party was in default under the Act in relation to the matter giving rise to the exercise of those powers. The claimant would be benefiting from its own wrong unless it was obtaining compensation from the defendants exercise of their powers in relation to the dangerous pier structure which it owned and had an obligation to repair the pier and remove the danger. In the present case, it was R and not the claimant who was in that position. Accordingly the claimant was not “in default” within the meaning of section 106: Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch 592 and Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government [2011] UKSC 15; [2011] 2 EGLR 151 considered.
Samuel Townend (instructed by Gaby Hardwicke Solicitors, of Hastings) appeared for the claimant; Steven Gasztowicz QC and Clare Parry (instructed by the Chief Legal Officer, Hastings Borough Council) appeared for the defendants.
Eileen O’Grady, barrister