Compensation – Statutory powers – Building Act 1984 – Appellant local authority closing pier in exercise of power under section 78 of 1984 Act owing to concerns about safety and structural integrity – Freeholder of pier owing repair and maintenance obligations on respect of pier structure to tenant under leases of premises on pier – Assignee of tenant claiming compensation from authority under section 106 – Whether tenant itself “in default” so as to preclude claim under section 106 – Whether section 106 claim relating to matters that would be actionable in tort but for existence of statutory power – Appeal dismissed
In mid-June 2006, the appellant council exercised their powers under section 78 of the Building Act 1984 by closing Hastings pier, and erecting barriers preventing public entry to it, owing to concerns about its structural integrity and safety. They then obtained a court order, under section 77 of the 1984 Act, prohibiting public access to the relevant part of the pier until such time as the court was satisfied that any necessary remedial works had been executed.
The necessary works were ultimately carried out by the tenant of an amusement arcade and bingo hall on the pier. The pier was then reopened. The tenant held its premises under two leases in which the demise included the ceilings and floors of the relevant units but not their structural supports. The lease imposed obligations on the freeholder, as the landlord under those leases, regarding the repair and maintenance of the pier structure. The tenant had been trying since 2004 to persuade the landlord to comply with those obligations.
The tenant went into liquidation and assigned to the respondent its claim for compensation from the appellants, under section 106 of the 1984 Act, for losses that it had suffered for the period from mid-June to mid-September 2006 by reason of the exercise of the section 78 power. The appellants disputed their liability on the grounds that: (i) the tenant was itself “in default” in respect of the matters for which compensation was claimed, within the meaning of section 106, by reason of breaches of the 1957 Act and the Health and Safety at Work Act 1974; and (ii) the claim did not relate to matters that, but for the statutory power, would be actionable in tort.
Allowing the claim, the judge held that only a “default” under the 1984 Act itself was relevant for the purposes of section 106 and that there had been no such default by the tenant in circumstances where the landlord was the party responsible for the repair and maintenance of the pier. He also held that, in barring public access to the pier, the appellants had interfered with the tenant’s right of way under the leases, which, in the absence of section 78 of the 1984 Act, would have given rise to a good cause of action in nuisance: see [2013] EWHC 842 (TCC); [2013] EGILR 13; [2013] 2 EGLR 17.
The appellants appealed. They submitted that any breaches by the tenant of the 1957 and 1974 Acts amounted to relevant “default” or, alternatively, would operate as a bar to any cause of action it might otherwise have in tort, under the principle of ex turpi causa.
Held: The appeal was dismissed.
(1) The tenant was not in breach of any obligation under the Building Act 1984 or the Building Regulations made pursuant to it. The party that was under a duty to repair the pier pursuant to the leases, and pursuant to section 77 of the 1984 Act, was the landlord. That analysis was not affected by the fact that the tenant had subsequently stepped in and rectified the defects. Nor could the tenant could not be criticised for failing to fence off the front end of the pier to prevent access by the general public, so as to give rise to a claim by the appellants to recover their fencing costs. The tenant was merely one of the business tenants operating on the pier and had no entitlement to block off access to the pier generally or to prevent members of the public from walking to the premises of other business tenants. Moreover, in June 2006 only the appellants had up-to-date expert evidence as to the condition of the pier and they had never asked the tenant to fence off the pier.
A breach of the Occupiers’ Liability Act 1957 or the Health and Safety at Work Act 1974 was not a “default” for the purposes of section 106 of the 1984 Act. The phrase “in default” in the 1984 Act was to be construed narrowly as referring to a failure to perform obligations arising under that Act; no broader construction was justified by the other provisions of the Act or a consideration of the legislative history in previous statutes: Hobbs v Winchester Corporation [1910] 2 KB 471, dealing with a similar provision in section 308 of the Public health Act 1875, considered. Accordingly, section 106 did not require the court to conduct a wide-ranging review of other legislation and the common law in order to see whether a party claiming compensation was in breach of any duties arising outside the 1984 Act.
It followed that the tenant was not “in default” within section 106. It had acted responsibly at all stages, having done its utmost to compel the landlord to carry out the remedial works and having ultimately stepped in and done the works itself. If the appellants wished to avoid liability to pay compensation under section 106, they could have brought proceedings under section 77 at an earlier date and therefore avoided the need to take emergency action under section 78.
(2) The principle of ex turpi causa established that a person should not be compensated for the consequences of his own criminal conduct. The appellants’ motivation for closing the pier in mid-June 2006 was the likelihood of large crowds, which the pier was not safe to carry, accessing the pier for reasons unconnected with the tenant’s business. As at that date, the tenant had incurred no liability under the 1957 Act, nor was there any basis for saying that it had committed any breach of the statutory duties that it owed to employees under the 1974 Act. Even if had committed a breach of those provisions, that would not trigger the operation of the ex turpi causa rule since, if the tenant had sued the appellants in mid-June 2006 for barring public access to the pier, it would not have been claiming compensation for the consequences of its own criminal conduct: Gray v Thames Trains Ltd [2009] UKHL 33; [2009] 1 AC 1339 distinguished. The “default” proviso in section 106 served to eliminate claims that were unacceptable on grounds of public policy. If a claimant was not “in default” within the meaning of section 106, the ex turpi causa rule would not defeat its claim.
Steven Gasztowicz QC and Clare Parry (instructed by the legal department of Hastings Borough Council) represented the appellants; Samuel Townend (instructed by Gaby Hardwicke Solicitors, of Hastings) appeared for the respondent.
Sally Dobson, barrister
