Manolete Partners Plc v Hastings Borough Council

Under section 106 of the Building Act 1984, compensation is payable where a local authority’s exercise of its statutory powers causes damage which would otherwise be actionable against a private person. The authority’s reasonableness, statutory authority or necessity does not defeat the claim. A subsequent application to the magistrates’ court does not displace the authority’s responsibility until an order is made.

The statutory exception for a claimant who is “in default” concerns default under the 1984 Act in relation to the matter giving rise to the authority’s intervention. Breach of duties under other enactments does not, without more, establish default. A tenant is not in default merely because its landlord has failed to repair a dangerous structure, where the tenant had no relevant repairing obligation.

The claimant, as assignee of Stylus Sports Limited’s claim, sought compensation from the defendant local authority under section 106 of the Building Act 1984. The authority had used section 78 to prevent public access to parts of Hastings Pier because of structural danger. The magistrates’ court later made an order under section 77.

The authority argued that the claim was caused by the court proceedings rather than the section 78 action, that the closure was not actionable in tort, and that the claimant was “in default” because of alleged duties under the Occupiers Liability Act 1957 and the Health and Safety at Work etc Act 1974. The central issues were the effect of the section 77 application and the meaning of “in default” in section 106.

1. The court declared that the Council was liable to compensate the claimant under section 106 of the Building Act 1984 for preventing public access to Hastings Pier between 16 June and 12 September 2006. The claimant was not “in default” within section 106.

2. An application under section 77 did not alter the legal character of the Council’s action while the application remained undecided. Until the magistrates’ court made an order, the absence of access resulted from the Council’s exercise of its emergency power under section 78. Once an order was made, the order, rather than the section 78 action, became effective. The statute contained no saving provision transferring liability for the earlier period.

3. Section 106 required damage caused by the authority’s exercise of its powers and contemplated a counterfactual cause of action against a private individual. Interference with access to premises would have been actionable as nuisance or interference with a right of access. The Council could not rely on the reasonableness of its conduct, statutory authority or necessity as defences, since that would deprive section 106 of practical content. The court applied the reasoning in Andreas Leonidis v Thames Water Authority (1979) 11 BLR 16 and Lingke v Christchurch Corporation [1912] KB 595.

4. “In default” meant default under the 1984 Act in relation to the matter giving rise to the exercise of the statutory power. It did not extend to alleged breaches of duties under the Occupiers Liability Act 1957 or the Health and Safety at Work etc Act 1974. The court followed the approach in Neath Rural District Council v Williams [1951] 1 KB 116.

5. The dangerous condition concerned the Pier structure owned and repairable by Ravenclaw. The claimant’s failure to carry out repairs, or to sue the landlord and recover the cost, did not make it a party in default. The court applied Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch 592.