Assessment of damages against local authority for partial loss of use of business premises resulting from authority’s negligence — Appeal by authority against judge’s assessment — Occupiers of premises, respondents to the present appeal, carried on business as wholesale butchers — They were occupying the premises (previously owned by them) under a temporary licence from the authority, pending the demolition of these and neighbouring premises, all old listed buildings which the authority were purchasing for eventual redevelopment — Owing to the authority’s negligent maintenance the building immediately adjoining that occupied by the respondents collapsed — Authority then served a prohibition notice on the respondents allowing them the use of the rear only of their premises, use of the front being prohibited as dangerous — Respondents continued to operate with this restriction for just over a year until the occupation was terminated by the authority — Question as to measure of damages for this restriction, which flowed from appellants’ negligence — Judge awarded £51,506, based on the difference between actual profits and profits which would have been earned in the absence of the restriction — Authority challenged this assessment in view of the temporary nature of the licence — Held, upholding award, that whether or not the temporary licence had been terminated by the prohibition notice the respondents would in fact, but for the collapse of the adjoining building, have remained in full occupation of the premises at least until the date when they quitted the rear portion — Appeal dismissed
This was an
appeal by Carlisle City Council against a decision of Caulfield J awarding Ben
Stansfield (Carlisle) Ltd £51,506.17 damages against the council for the
restricted use of premises at 77 Scotch Street, Carlisle, owing to alleged
negligence on the part of the council, resulting in the collapse of an
adjoining building.
Jonathan Henty
(instructed by the City Solicitor, Carlisle City Council) appeared on behalf of
the appellant council; John Fryer Spedding (instructed by Cartmell, Mawson
& Main, of Carlisle) represented the respondents.
Giving
judgment, SIR JOHN DONALDSON MR said: This is an appeal by the Carlisle City
Council against a judgment of Caulfield J given on June 19 1981 whereby he
awarded £51,506.17 damages together with costs to Ben Stansfield (Carlisle)
Ltd.
The facts out
of which this claim arose were these. Stansfields were an old-established
wholesale butchers’ business making pies and the like from premises at 77
Scotch Street, a very elderly building. On the one side of it was 79 Scotch
Street and beyond 79 Scotch Street — just to complicate matters — was 1 English
Street. They were all in a straight line. All these buildings were very
elderly; they were all listed buildings.
In 1977 the
corporation came to the conclusion that these buildings would probably have to
be demolished subject to getting all necessary consents from the Department of
the Environment. They set about purchasing the buildings with a view to being
able to redevelop the area. They bought no 77 from Stansfields for the sum of
£100,000. Stansfields then said to the council, ‘May we remain as licensees
until such time as you are ready to redevelop?’
The council, who so far as I can see, reading the correspondence,
behaved throughout with great responsibility and reasonableness, said in
effect, ‘Well; why not? But of course we
cannot have you with a business tenancy or anything of that sort. You may remain
under a licence — a licence which shall be terminable at will and at the
council’s pleasure. By way of recompense for use and occupation under the
licence you shall pay at the rate of £5,000 a year.’
It was an
eminently sensible arrangement, and it is clear that Stansfields could have had
no possible cause for complaint as a matter of law if the council had the next
day said, ‘We have now decided that we do not want you operating any more from
these premises; you must leave.’ But of
course the council did not say anything of the sort, and the council would not
have said anything of the sort because they were a reasonable, sensible and
responsible council who wanted the best possible use to be made of this
property for as long as possible, without prejudice, of course, to their right
to redevelop.
No council
faced with an elderly property of this sort, which is going to be redeveloped,
will want to waste money on unnecessary maintenance, and the corporation very
sensibly took that view. But there is always an element of risk involved. You
may, in your very reasonable desire not to waste money on maintenance, do just
that little bit too little maintenance, as a result of which there is a
disaster; and that is what happened in the case of these properties. The
council did a little too little maintenance on no 79, which was next door to no
77 occupied by Stansfields.
On the night
of March 13 1978, after the licence had been running for a year, no 79
collapsed. Mr Henty gave a brief account of it from which it must have been a
spectacular sight, because apparently all that could be seen were bits going up
in the air, as it were in a puff of smoke; but, at all events, it collapsed.
The result was
to make no 77 an extremely dangerous structure, and on the next morning a
prohibition notice was served on Stansfields making it illegal for them to
occupy or use no 77. That was followed on the following day, March 15 1978, by
a second prohibition notice, which in effect was a variation of the first,
saying that they could use the rear part of the premises for their
manufacturing activities, but the prohibition was maintained on the front part
of the premises, which continued to be dangerous.
Stansfields
continued in occupation of the rear part until May 2 1979 — just over a year
later — when the council gave them notice to quit, and they left on June 9
1979. Stansfields claimed the difference between the profits which they would
have made if they had remained in occupation of no 77 up to June 9 1979 without
any restriction on their use of the premises and what they were in fact able to
earn during the like period using only the rear part of the premises. That is
how the figure of £51,000 is calculated, and that is the figure which the
learned judge awarded.
Mr Henty, for
the appellants, submits that this is, first of all, a little hard and,
secondly, wrong in law. It is conceded that the council were negligent in their
maintenance of 79 Scotch Street. That was determined in a separate action
involving some plaintiffs called
purposes of this action that the corporation were negligent. We are therefore
assessing damages for admitted negligence. Mr Henty says that you assess the
loss of the chance which Stansfields had as at March 13 or 14 1978 to continue
in occupation. He says it is impossible that they could have had a slimmer
chance or a more fragile licence than the licence which they had; one which
required them to leave at the will and pleasure of the council. Accordingly, he
says, we ought to assess damages on the basis that the council could have
thrown Stansfields out the following day. Alternatively he says — and this may
well be right — that the licence was terminated by operation of law by the
service of the prohibition notice, since any occupation contrary to the service
of the prohibition notice would be illegal. For my part, I would accept that.
So we have the position that the licence was terminated on the day following
the incident.
But that to my
mind does not solve the problem of what is the chance that Stansfields lost. It
seems to me to be absolutely clear in the light of the responsible way in which
the council has behaved throughout that, but for this unfortunate incident,
Stansfields would in fact have remained in occupation of the whole of no 77
until at least June 9 1979 and probably for much longer. Accordingly, what they
have lost due to the negligence of the council is the actual use of that part
of no 77 which was covered by the second prohibition notice. It is quite
immaterial whether the council could have terminated the licence on March 13 or
14 1978 or whether the licence was terminated by the prohibition notice. Any
termination of the licence before June 9 1979 was the direct consequence of the
council’s negligence and so is the loss to the plaintiffs which flowed from it.
For those
reasons it seems to me that the learned judge was plainly right and I would
dismiss the appeal.
O’CONNOR LJ
said that he agreed and did not wish to add anything.
The appeal
was dismissed with costs.
