In June 2006 Hastings Borough Council used an emergency power to close much of Hastings Pier after engineers warned that crowd-loading might cause a collapse. Stylus Sports Ltd, which ran a bingo hall and an amusement arcade near the entrance, claimed compensation for the business lost during that closure. The Supreme Court held that Stylus had not been in default in relation to the matter which led the council to act, so the claim was not barred, although the amount was left to an arbitrator.
Hastings Borough Council closed much of Hastings Pier to the public on 16 June 2006, using the emergency power in section 78 of the Building Act 1984. Stylus Sports Ltd ran a bingo hall and an amusement arcade in two units near the entrance. It claimed compensation for loss until 12 September 2006, when the magistrates made their own order restricting access. After Stylus went into liquidation, Manolete Partners Plc pursued the claim as assignee. The only issue in the Supreme Court was whether Stylus had itself been in default, so that section 106 barred compensation.
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Compensation and emergency closure
Under section 77, the council may ask the magistrates to deal with a dangerous building. The court may order the owner to carry out work or demolish it, or, where the danger comes from overloading, restrict use until the necessary work is done. Section 78 is the emergency power. If a building or structure appears dangerous and immediate action should be taken, the authority may take such steps as may be necessary, after giving notice to the owner and occupiers if reasonably practicable. Unlike section 77, that power does not first provide a right of objection or a hearing.
Section 106(1) requires full compensation for a person who has sustained damage by reason of the exercise of a power under the Act, but only in relation to a matter as to which that person has not himself been in default. A dispute about the fact of damage, or about the amount, is decided by arbitration. Section 78(7) gives even a person in default a limited route to compensation: the magistrates may be asked whether the authority was justified in using the emergency power rather than first seeking an order under section 77. This claim was not brought on that basis. It was for loss caused by the emergency closure, not by the magistrates’ order, which carries no right to compensation. That is why it ended on 12 September 2006.
The pier and the trigger for closure
Stylus operated businesses on Hastings Pier under a lease. The pier’s owner was responsible for the structural supports.
An earlier survey identified problems with the structure. The pier and the businesses remained open.
In 2006 a further report identified serious structural defects. It recommended immediate restrictions on access where crowds might gather, pending repairs or an alternative safe route. The council used its emergency powers.
The council closed the pier from the front facade, erected a barrier with a notice reading “danger keep out”, and wrote to tenants. The letter said that large events were still being booked, that at least five trusses had failed at the only way on and off the pier, and that an evacuation would send crowds across an unsafe area. The same day the council applied to the magistrates under section 77(1)(b). On 12 September 2006 the court prohibited public access until the necessary works were done. Stylus later obtained summary judgment requiring Ravenclaw to repair, which was not obeyed, and in 2007 carried out work under its own premises. On 4 July 2007 the magistrates allowed the public back into those premises. The compensation claim, notified on 8 November 2006 and assigned to Manolete in January 2012, concerned only 16 June to 12 September 2006.
What the lower courts decided
The council said Stylus was in default under the Occupiers’ Liability Act 1957 and the Health and Safety at Work etc Act 1974, and because it knew by 2004 of serious defects but did not secure repair or exclude the public. Ramsey J held that default meant default under the 1984 Act itself. Jackson LJ agreed in the Court of Appeal. He accepted that similar wording in the Public Health Acts of 1875 and 1936 extended to related local building legislation, but thought the 1984 Act comprehensive, so no such extension was needed. He also read “default” in sections 77 and 78 as failure to perform obligations under the 1984 Act.
Jackson LJ recognised the difficulty: Ravenclaw, which he called the true culprit, was beyond enforcement, while the council was asked to compensate Stylus for being prevented from admitting the public to dangerous premises. He held that the statute nevertheless placed the loss on the council. Stylus had tried to compel the landlord to repair and had eventually done the work itself. The council could have used section 77 earlier and avoided emergency action. He also rejected an argument that the claim was barred because admitting the public would have conflicted with Stylus’s statutory responsibilities. The closure was motivated by likely large crowds for reasons unconnected with Stylus’s business. As at 16 June 2006, he found that Stylus had not incurred liability to any visitor under the 1957 Act, and he saw no basis for a breach of its duties to employees. The pier’s condition could still be raised on the amount of compensation.
Why the claim was not barred
Lord Carnwath, with whom Lady Hale, Lord Kerr, Lord Toulson and Lord Hodge agreed, treated section 106(1) as asking what matter led the authority to exercise the power, and whether that was a matter as to which the claimant was in default. The council’s use of section 78 was not itself in issue. The evidence, especially the letter to tenants, showed that the trigger was not the general state of the pier or the repairs identified in 2004. The council had known of those matters since 2005 without closing the pier or proceeding against Stylus. What led it to act immediately was the state of the pier combined with fear of collapse from crowd-loading at events planned for June 2006, particularly in an emergency evacuation. Stylus was not legally responsible for the state of the pier or for those events. Whatever its position towards customers and employees, it was not in default as to the matter which led to the emergency action.
Lord Carnwath also rejected the view that default is confined to the 1984 Act. The same formula had been used for more than a century in statutes with differing powers. Once default under the earlier Acts could include breach of related legislation, the wording did not justify excluding other legal default. Section 77(2)(b) identifies a specific failure to comply with a magistrates’ order, and section 78(7) raises the same question as section 106. The older authorities did not require the narrower reading. Hobbs v Winchester Corporation concerned only default under the 1875 Act. Place v Rawtenstall Corporation turned on work going beyond what the owner had failed to do. Clayton v Sale Urban District Council treated default as capable of arising outside the statute, while Neath Rural District Council v Williams turned on the absence of any statutory or common-law duty, not on a rule that only the Act itself could create default.
The council therefore had no defence in principle, but not because Stylus had committed no default under the 1984 Act. It was because any default by Stylus was not what led to the emergency action. That conclusion does not limit the arbitration. The arbitrator may consider Stylus’s statutory and common-law responsibilities to customers and employees, and the council may argue that loss of profit must be substantially reduced because of the pier’s condition and its effect on the business apart from the closure.
Verdict: The Court unanimously dismissed the council’s appeal. Stylus was not in default in the matter that prompted the emergency action, so the compensation claim could proceed. The arbitrator, not the Supreme Court, was to decide the loss and its amount.
Source: Hastings Borough Council v Manolete Partners Plc [2016] UKSC 50
