Manolete Partners PLC v Hastings Borough Council [2013] EWHC 842 Mr Justice Ramsey, TCC

Like so many Victorian piers, Hastings Pier has not been kept in good repair. This claim (by way of an assignment) by a tenant of the Pier was for statutory compensation under the Building Act 1984 resulting from the use of powers by the local authority to close the Pier to public access over concerns about its structural integrity and, therefore, closing the tenant's bingo hall and amusement arcade.

On 16 June 2006, Hastings Borough Council exercised 'emergency' powers under Section 78 of the Building Act 1984 to close the Pier to the public. Section 106 of the Act provides for the local authority to pay full compensation to any person who has suffered damage as a result of the exercise of powers under the Act except where the person was 'in default'.

The local authority argued that there was no good independent cause of action and, in particular, in relation to an analogous claim in nuisance, relied on the defences of statutory justification and the lack of any evidence that it had acted 'unreasonably', and that, therefore, there was no entitlement to compensation.

It also argued that Section 106 compensation did not apply because the tenant was 'in default' under the Occupiers Liability Act 1957, section 2, in failing to take reasonable care to ensure that visitors were reasonably safe, and in breach of the Health and Safety at Work Etc Act 1974, section 2 (1) and Section 3, as it allowed its employees and others to be on the Pier.

Finding in favour of the tenant, Mr Justice Ramsey determined that no independent cause of action needs to be established to succeed in a claim for compensation under Section 106 of the Act and that, absent the statutory power, there would have been a good cause of action for the loss suffered.

Further, that 'default' required breach of some obligation to do something imposed by the Building Act itself, or at least in breach of some obligation to the local authority, not some wider obligation to third parties.

No breach of obligation to the local authority existed.

"...the fact that a party may be in breach of a duty owed to third parties should not, in principle, prevent that party from obtaining compensation when that party sustains damage by reason of the exercise by the relevant authority of powers under the Act.

Very often the acts of a party may give rise to compensation from one party whilst at the same time being in default as regards third parties. It is generally only default in relation to the party obliged to give compensation which would provide a defence. In my judgment it is that principle which applies here."

Permission to appeal was sought by the Council at first instance, but rejected. A further application for permission to appeal has been made to the Court of Appeal and is pending.

The case stands as the first successfully litigated claim for compensation under Section 106 of the Building Act 1984.

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This material is prepared for Chambers by our Director of Research and Professional Development, Professor Anthony Lavers (LL.B. M.Phil Ph.D. D.Litt MCI.Arb FRICS Barrister) Visiting Professor of Law, Oxford Brookes University.