Hastings Borough Council v Manolete Partners Plc
| Jurisdiction | England & Wales |
| Judge | Lord Kerr,Lord Carnwath,Lord Toulson,Lord Hodge,Lady Hale |
| Judgment Date | 27 July 2016 |
| Neutral Citation | [2016] UKSC 50 |
| Date | 27 July 2016 |
| Court | Supreme Court |
[2016] UKSC 50
Lady Hale, Deputy President
Lord Kerr
Lord Carnwath
Lord Toulson
Lord Hodge
Appellant
Steven Gasztowicz QC Jack Parker
(Instructed by Legal Services, Hastings Borough Council)
Respondent
Martin Bowdery QC
(Instructed by Gaby Hardwicke Solicitors)
Heard on 23 June 2016
(with whom Lady Hale, Lord Kerr, Lord Toulson and Lord Hodge agree)
The council appeals against the decision that it is liable to pay compensation under section 106 of the Building Act 1984, for loss to a business on Hastings Pier arising from its closure during 2006 under the council's emergency powers. The respondent ("Manolete") pursued the claim as assignee of Stylus Sports Ltd ("Stylus"), which owned and operated the business at the relevant time, but went into liquidation in late 2011. The only issue in the appeal is whether Stylus was itself "in default" within the meaning of that section, so precluding it from making a claim.
As explained more fully by Jackson LJ in the Court of Appeal ( [2014] 1 WLR 4030, [2014] EWCA Civ 562, 46 paras 46ff), the 1984 Act is one of a sequence of public health statutes, going back to the 19th century, which among other matters have dealt with the regulation of new buildings and the control of dangerous structures. The 1984 Act draws together a number of such provisions, including building regulations (Part I), supervision of construction work other than by local authorities (Part II), and "Other provisions about buildings" (Part III). Within Part III, and relevant to this case, are section 77 ("Dangerous building") and 78 ("Dangerous building—emergency measures").
Section 77 enables the council to apply to the magistrates' court in relation to a building or structure which "is in such a condition, or is used to carry such loads, as to be dangerous". Under subsection (1), the court may either (a) where danger arises from the condition of the building or structure, order the owner to execute work necessary to obviate the danger or to demolish it, or —
"(b) where danger arises from overloading of the building or structure, make an order restricting its use until a magistrates' court, being satisfied that any necessary works have been executed, withdraws or modifies the restriction."
By section 77(2)(b) if the person against whom an order is made under subsection (1)(a) above fails to comply with the order within the time specified, the local authority may execute the order and —
"(b) recover the expenses reasonably incurred by them in doing so from the person in default."
Under section 78 (directly relevant to this case), where it appears to the authority that a building or structure or part of it is in such a state, or is used to carry such loads, as to be dangerous, and that "immediate action should be taken to remove the danger", they may take "such steps as may be necessary for that purpose", having given notice if reasonably practicable to the owner and occupiers.
Compensation is governed by section 106 (in Part IV of the Act):
"(1) A local authority shall make full compensation to a person who has sustained damage by reason of the exercise by the authority, in relation to a matter as to which he has not himself been in default, of any of their powers under this Act." (emphasis added)
By section 106(2) any dispute arising "as to the fact of damage, or as to the amount of compensation" is to be determined by arbitration.
In the context of a claim resulting from emergency action under section 78, section 106 must be read with section 78(7):
"(7) Where in consequence of the exercise of the powers conferred by this section the owner or occupier of any premises sustains damage, but section 106(1) below does not apply because the owner or occupier has been in default —
(a) the owner or occupier may apply to a magistrates' court to determine whether the local authority were justified in exercising their powers under this section so as to occasion the damage sustained, and
(b) if the court determines that the local authority were not so justified, the owner or occupier is entitled to compensation, and section 106(2) and (3) below applies in relation to any dispute as regards compensation arising under this subsection."
The "default" on which the council relies includes alleged breaches (actual or prospective) of the duties imposed by the Occupiers' Liability Act 1957 and the Health and Safety at Work etc Act 1974. In short the former (by section 2) imposes on occupiers of premises the "common duty of care"; that is —
"a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there."
The latter, by section 2, imposes on an employer the duty to "ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees", and in particular to maintain any place of work (including means of access and egress) in a condition that is safe and without risks to their health.
The history of the pier structure is described in the report by engineers for the council ("the Gifford report") in June 2006, which led directly to their decision to close the pier:
"The original Hastings Pier was opened in 1872. It was built to a length of 277m with its timber deck bearing on wrought iron lattice trusses, all supported on three rows of cast-iron screw piles via cast-iron columns; the columns were braced with wrought iron ties secured with cast-iron clamps. The width varied from 13.6m at the Central Section to 60m at Head and 39.6m at the landward end. Repairs utilising steel trusses and steel columns have been undertaken at various times since following a fire in 1917 to the Pier Head, partial demolition (sectioning) and actual bomb damage during the 1939–45 war, and widening to both sides of the Pier …"
They commented on the general state of the pier:
"Experience has shown the typical life of Victorian piers to be approximately 100 years; during this time continual maintenance would have been required, including the replacement [of] some critical elements. After this time, major reconstruction works would be required if continued use of the pier were to be viable. The general condition of Hastings Pier fits this pattern."
In recent years the freehold of the pier was owned by Ravenclaw Investments Incorporated ("Ravenclaw"), a company registered in Panama, and managed on their behalf by Boss Management UK Ltd ("Boss"). Stylus occupied two units, C2 and C15, close to the entrance to the pier at the northern (town) end. They operated a bingo hall in unit C2 and an amusement arcade in unit C15. The units were held respectively under leases from Ravenclaw dated 14 August 2001 and 10 October 2001. The "premises" as so leased were confined generally to the internal non-structural walls, and internal surfaces, and specifically excluded "any main structural parts of the premises or of the building …" (Schedule 1). Ravenclaw as landlord was responsible for repair and when necessary renewal of the structure including the support structure of the pier.
In 2004 Stylus became concerned about the structural integrity of the pier. They commissioned a full structural engineering survey of the pier by Hamill Davies Limited. The report ("the HDL report"), produced in September 2004, was provided both to Ravenclaw and in January 2005 to the council. It advised that urgent work was required to repair piles at the far end of the pier (some distance beyond the Stylus units). This should be done "ideally" within the next two months "to avoid the worst of the winter weather"; and the deck area supported by these piles "should be closed to the public until this work is completed". They also advised that future work should be carried out to the structure of the pier in the area of the Stylus units. Of this they said:
"With regard to the remaining work it is understood that this cannot be undertaken immediately. However this work should be completed within one year, with regular monitoring of the defective areas until this can be achieved. Unless this is carried out we judge there to be an unacceptable risk to the public."
There is no evidence of action by Ravenclaw or the council to remedy the structural defects in response to this report, other than some limited work by Ravenclaw in the winter of 2005–2006. Meanwhile the public continued to use the pier, and the pier facilities (including the bingo hall and the amusement arcade) remained open for business.
In early April 2006 a council officer inspected the underside of the pier, when a section of tension cord fell from the pier. The council commissioned Gifford to report on the structural stability of the pier. Their brief included appraisal of its structural integrity and any potential risks to the public. The areas chosen were "those that would be subjected to the greatest crowd loading in the event of mass evacuation of the buildings, ie the designated escape routes" (report para 1.3). In May 2006 the council tried without success to compel Ravenclaw to commission a full structural assessment of the Pier. On 15 June 2006 they asked Boss, as agents for Ravenclaw, to close off the pier beyond the front facade, but that request was not complied with.
The Gifford report, received by the council on 16 June 2006, identified serious structural defects, and recommended a full structural survey as a matter of urgency. It recommended by way of "immediate restrictions"
"a) Access resulting in the potential for crowd loading on the Central Section and...
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...and see also Swindon Borough Council v Forefront Estates Ltd [2012] EWHC 231 (TCC); Hastings Borough Council v Manolete Partners plc [2016] UKSC 50. 52 Building Regulations (SI 2010/2214) regulation 4(1)(a). 53 See, concerning cognate regulations in Australia, Toomey v Scolaro’s Concrete Co......