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 – Respondent claiming compensation from authority under section 106 as assignee of tenant of premises on pier – Whether such claim precluded on ground that tenant “in default” within meaning of section 106 – Whether such default limited to default under 1984 Act itself – Appeal dismissed
In June 2006, the appellant council closed Hastings pier by erecting a barrier preventing public access. They took that action in the exercise of their powers under section 78 of the Building Act 1984, owing to concerns about the structural integrity and safety of the pier. Businesses operating on the pier were informed of the appellants’ decision in a letter which cited safety concerns arising from the likelihood of large crowds accessing the pier for large events that were being planned in the pier ballroom. In September 2006, the appellants then obtained an order from the magistrates’ court, 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, although the pier structure fell outside the tenant’s demise and the obligation to repair and maintain it in fact lay with the freeholder, as landlord, under the terms of the relevant leases. The tenant had been trying since 2004 to persuade the landlord to comply with those obligations. In January 2005, it had provided the appellants with a copy of a structural report which identified various issues with the pier and recommended remedial works.
The tenant subsequently went into liquidation. The respondent took an assignment of the tenant’s claim for compensation, 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 for compensation. They contended that, inter alia, 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 Occupiers’ Liability Act 1957 and the Health and Safety at Work Act 1974, and therefore did not meet the statutory criteria for compensation.
The compensation claim was allowed in the courts below. Both the High Court and the Court of Appeal 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: see [2013] EWHC 842 (TCC); [2013] EGILR 13; [2013] 2 EGLR 17 and [2014] EWCA Civ 562; [2014] 2 EGLR 145; [2014] EGILR 61. The appellant appealed.
Held: The appeal was dismissed.
(1) Section 106 of the Building Act 1984 gave a right to compensation to a person who had sustained damage by reason of the exercise of any of the local authority’s powers under the Act “in relation to a matter as to which he has not himself been in default”. That raised two questions: first, what was the “matter” in relation to which the authority had exercised its power; and, second, whether that was a matter “as to which” the claimant had been in default.
It was important to keep in mind that the claim was for loss resulting from the emergency action taken by the appellants under section 78, not from the order of the magistrates’ court under section 77, which itself carried no right to compensation. That was why the claim was limited to the period from the date of closure in June 2006 until the court order in September 2006. The right to compensation provided an important check on the unbridled use of the section 78 emergency power, in respect of which, unlike section 77, there was no right of objection or recourse to the court.
It was therefore necessary to identify the matter that led the appellants to take such emergency action, rather than applying first to the magistrates’ court. That matter was not the general state of the pier, or even the specific repairs identified in the structural report, since the appellants had been aware of those matters at least since the receipt of that report in early 2005, but had not thought it necessary to close the pier or to take any legal action against the tenant at that stage. Had they wished to do so, there was no reason why they could not have applied to the court for the appropriate order, giving the tenant the opportunity to make representations. No issue of compensation would then have arisen. Instead, the matter that triggered the exercise of the section 78 power, as evidenced by the letter sent to businesses on the pier, was the state of the pier combined with fear of possible collapse from crowd-loading during the events planned for that month, particularly the risk of overloading in an emergency evacuation. The tenant was not legally responsible for the state of the pier, nor was it responsible for the events that triggered the appellants’ action. Whatever might have been its position with regard to its clients and employees, it was not “in default” as to the matter that led to the appellants’ use of section 78. On that basis, the tenant was entitled to succeed in its compensation claim.
(2) Although it was not necessary to decide for the purposes of the present appeal, the better view was that the “default” referred to in section 106 was not confined to a default under the 1984 Act itself. That view was supported by the legislative history. The same formula had been used for more than 100 years in statutes which, while covering the same general subject matter, included a varying range of powers; that made it unlikely that it was linked specifically to the particular provisions of each statute. The similar formula in the Public Health Acts 1875 had been read as extending to default under “related Acts”, such as local Building Acts and Improvement Acts. Once that extension was accepted, it was hard to see why it should not extend to other forms of legal default. Concerns as to the wide-ranging nature of the factual inquiry implied by that approach did not arise if the inquiry was limited in the way suggested above.
Accordingly, the appellants had no defence in principle to the claim for compensation. That was not because there had been no default under the 1984 Act, but because it was not a default by the tenant that led to the emergency action under section 78.
Steven Gasztowicz QC and Jack Parker (instructed by the legal department of Hastings Borough Council) appeared for the appellants; Martin Bowdery QC (instructed by Gaby Hardwicke Solicitors, of Hastings) appeared for the respondent.
Sally Dobson, barrister
• Read a transcript of Manolete Partners plc v Hastings Borough Council here
