LCA/7/2006
Hussain v Salford City Council [2006] EWLands LCA_7_2006 (10 August 2006)

LANDS TRIBUNAL ACT 1949

COMPENSATION – demolition order – claimant with leasehold interest in part of building the subject of demolition order – whether entitled to compensation – Housing Act 1989 s 584A

IN THE MATTER OF A NOTICE OF REFERENCE

BEETWEEN	IMTIAZ HUSSAIN	Claimant

and

SALFORD CITY COUNCIL	Compensating
Authority

Re:	148 Kenyon Way
Little Hulton
Salford
Greater Manchester

Determination under written representations procedure

by the President

DECISION
1.	The claimant in this case claims compensation under section 584A of the Housing Act 1985 in respect of a demolition order made by the compensating authority.  The building that was the subject of the order consisted of a block of flats, 134(a) to 148(a) Kenyon Way, Little Hulton, Salford.  At the date of the making of the order, 9 June 2004, the claimant had a leasehold interest in part of the premises, 148 Kenyon Way.  The lease was for 5 years from 24 April 2004.  The claimant occupied the premises for the purposes of a newsagent and convenience store.  Notice of the order was served on him on 10 June 2004.  The order required that the flats be vacated within a period of 28 days from the date on which the order became operative and that they be demolished within 6 weeks after that or, if later, the date when they were vacated.  The claimant vacated the premises in October 2004, and the premises were demolished in October 2005.
2.	The amount of compensation is not in dispute.  It is agreed at £110,500, plus surveyors’ and legal fees.  The compensating authority deny, however, that the claimant is entitled to compensation under the terms of the Act.  This is the sole issue in the reference.  With the consent of the parties it is to be determined under the written representations procedure.  I have before me submissions prepared on behalf of the claimant by Mr Mark Harper of counsel and representations on behalf of the compensating authority that set out the advice that they have received from counsel.
3.	The power to make a demolition order is contained in Part IX of the 1985 Act.  At the relevant time section 265, as substituted by the Local Government and Housing Act 1989, provided:
“(1)	Where the local housing authority are satisfied that –
(a)	a dwelling-house which is not a flat, or 
(b)	a house in multiple occupation which is not a flat in multiple occupation,
is unfit for human habitation and that, in accordance with section 604A, taking action under this subsection is the most satisfactory course of action, they shall make a demolition order with respect to the dwelling-house or house concerned.”
(2)	Where the local housing authority are satisfied that, in a building containing one or more flats, some or all of the flats are unfit for human habitation and that, in accordance with section 604A, taking action under this subsection is the most satisfactory course of action, they shall make a demolition order with respect to the building.”
4.	Section 268, as amended, provided:
“(1)	Where a local housing authority have made a demolition or closing order, they shall serve a copy of the order on –
(a)	....
(b)	any .... person who is an owner of the premises, and 
(c)	every mortgagee of the premises whom it is reasonably practicable to ascertain.
(1A)	Where the premises in respect of which a demolition or closing order is made is a building or part of a building containing flats, any reference in paragraphs (b) and (c) of subsection (1) to ‘the premises’ includes a reference to the flats in the building or part of the building concerned.”
5.	Section 269 gave to a person aggrieved by a demolition order the right of appeal to the county court.  Section 271 provides for the execution of the order.  It requires the owner of the premises to demolish the premises and, if they are not demolished within the time limited by the order, the local housing authority are required to enter and demolish the premises and sell the materials.  Under section 272 expenses incurred by the authority in executing the order are recoverable from the owner of the premises. 
6.	Section 322 as amended contained certain minor definitions.  It provided:
“(1)	In this part 
‘dwelling-house’ and ‘flat’ except in the expression ‘flat in multiple occupation’, shall be construed in accordance with subsection (2) and ‘the building’, in relation to a flat, means the building containing the flat;
‘house in multiple occupation’ and ‘flat in multiple occupation’ have the same meaning as in Part XI;
‘owner’, in relation to premises 
(a)	means a person (other than a mortgagee not in possession) who is for the time being entitled to dispose of the fee simple in the premises, whether in possession or in reversion, and 
(b)	includes also a person holding or entitled to the rents and profits of the premises under a lease of which the unexpired term exceeds three years;
‘premises’, in relation to demolition or closing order, means the dwelling-house, house in multiple occupation, building or part of a building in respect of which the closing order or, as the case may be, demolition order is made.
(2)	For the purposes of this Part, ‘dwelling-house’ includes any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it and section 183 shall have effect to determine whether a dwelling-house is a flat.
(3)	Except where the context otherwise requires, any reference in this Part (other than this section) to a flat is a reference to a dwelling-house which is a flat or to a flat in multiple occupation.”

7.	I have set out and referred to these provisions in Part IX because it is by reference to them that the compensating authority contends that the claimant is not entitled to compensation.  The compensation provisions are contained in Part XVII of the Act.  Section 584A provides:
“(1)	Subject to subsection (3), where a closing order under section 264 or a demolition order under section 265 is made in respect of any premises, the local housing authority shall pay to every owner of the premises an amount determined in accordance with subsection (2).
(2)	The amount referred to in subsection (1) is the diminution in the compulsory purchase value of the owner’s interest in the premises as a result of the making of the closing order or, as the case may be, the demolition order; and that amount 
(a)	shall be determined as at the date of the making of the order in question; and
(b)	shall be determined (in default of agreement) as if it were compensation payable in respect of the compulsory purchase of the interest in question and shall be dealt with accordingly.
(3)	In any case where 
(a)	a closing order has been made in respect of any premises, and 
(b)	by virtue of section 279 (closing orders: substitution of demolition order), the closing order is revoked and a demolition order is made in its place,
the amount payable to the owner under subsection (1) in connection with the demolition order shall be reduced by the amount (if any) paid to the owner or a previous owner under that subsection in connection with the closing order. 
(4)	For the purposes of this section 
‘compulsory purchase value’, in relation to an owner’s interest in premises, means the compensation which would be payable in respect of the compulsory purchase of that interest if it fell to be assessed in accordance with the Land Compensation Act 1961; and 
‘premises’ has the meaning assigned by section 322 (minor definitions for the purposes of Part I).”
8.	Section 602 provides:
“‘owner’, in relation to premises 
(a)	means a person (other than a mortgagee not in possession) who is for the time being entitled to dispose of the fee simple in the premises, whether inn possession or in reversion, and 
(b)	includes also a person holding or entitled to the rents and profits of the premises or part of the premises under a lease of which the unexpired term exceeds three years.”
9.	The case for the claimant is straightforward.  Under section 584A the authority is required to pay compensation to “every owner of the premises” in respect of which the demolition order was made; and under section 602 “owner” includes a person holding the premises under a lease with an unexpired term in excess of 3 years.  On the facts, the entitlement to compensation is made out.  The compensating authority’s case is based on the provisions of Part IX.  They point out that for the purposes of section 584A “premises” has the meaning assigned to it by section 322, ie “in relation to demolition or closing order, means the dwelling house, house in multiple occupation, building or part of a building in respect of which the closing order or, as the case may be, demolition order is made”.  They say that the reference to “part of a building” is to deal with closing orders, which can be made in respect of part of a building containing flats.  However, a demolition order cannot be made with respect to part of a building  it has to be made in respect of the whole building. 
10.	For the purposes of section 584A, therefore, the compensating authority say, the owner of “the premises” in respect of which a demolition order is made, and who is thus entitled to compensation, is the owner of the building containing the flats, ie the owner of the block of flats.  The lessee of an individual flat within the block of flats is not an owner of “the premises” in respect of which the demolition order is made, and is thus not entitled to compensation.  They contend that this interpretation is supported by the fact that section 268 of the Act provides that where a local housing authority have made a demolition order, they shall serve a copy of the order on any person who is the owner of the premises.  Subsection (1A) then provides that “where the premises in respect of which a demolition order ... is made is a building or part of a building containing flats, any reference in subsection (1) to the premises includes a reference to the flats in the building”.  This, the compensating authority say, strengthens the conclusion that individual flats do not fall within the definition of “premises” because if that were not the case, there would have been no need to include subsection (1A).  It is also submitted that the position is further complicated by the fact that the definition of “owner” in relation to section 584A (entitlement to compensation) is set out in section 602, and is slightly different from the definition in s.322 in that it refers to a person holding or entitled to the rents and profits of the premises (or part of the premises) under a lease of which the unexpired term exceeds three years. 
11.	The compensating authority’s contentions are, in my judgment, misconceived.  Under section 584A compensation is payable to “every owner” of the premises that are the subject of the demolition order.  Under section 602 “owner” includes a person holding part of the premises under a lease with an unexpired term in excess of 3 years.  The demolition order was made in respect of premises consisting of 134(a) to 148(a) Kenyon Way.  The claimant held part of those premises under a lease with an unexpired term in excess of 3 years.  He thus qualified as an owner, and he is entitled to compensation.  
12.	The misconception of the compensating authority is in thinking that, because a demolition order cannot be made in respect of part only of a building, a person who is the owner of part only of a building that is the subject of a demolition order cannot be entitled to compensation.  There is no reason in logic why that should be so.  Nor can I see any basis as a matter of statutory construction for qualifying the clear words of sections 584A and 602 so as to deprive a person in the position of the claimant of compensation for what he has lost through the making of a demolition order. 
13.	I am told that compensation is agreed in the sum of £110,500 plus surveyors’ and legal fees.  So that a final order may be made, those fees need to be quantified, and the amount should be notified to the Tribunal within the next 28 days.  The parties are now invited to make submissions on costs, and a letter dealing with this accompanies this decision.  The decision will become final when the question of costs has been determined. 
Dated 10 August 2006

George Bartlett QC, President