CA 1989 s. 58: Compensation on cessation of community home
CA 1989 s. 58: compensation due on cessation of community home. Amount depends on whether home was controlled or assisted and on past expenditure or grants.
Where— the instrument of management for a controlled or assisted community home is revoked or otherwise ceases to have effect under section . . . , 56(3) or (4)(a) or 57(3) or (5); or any premises used for the purposes of such a home are (at any time after 13th January 1987) disposed of, or put to use otherwise than for those purposes, the proprietor shall become liable to pay compensation (“the appropriate compensation”) in accordance with this section. Where the instrument of management in force at the relevant time relates— to a controlled community home; or to an assisted community home which, at any time before the instrument came into force, was a controlled community home, the appropriate compensation is a sum equal to that part of the value of any premises which is attributable to expenditure incurred in relation to the premises, while the home was a controlled community home, by the authority who were then the responsible authority. Where the instrument of management in force at the relevant time relates— to an assisted community home; or to a controlled community home which, at any time before the instrument came into force, was an assisted community home, the appropriate compensation is a sum equal to that part of the value of the premises which is attributable to the expenditure of money provided by way of grant under section 82, section 65 of the Children and Young Persons Act 1969 or section 82 of the Child Care Act 1980. Where the home is, at the relevant time, conducted in premises which formerly were used as an approved school or were an approved probation hostel or home, the appropriate compensation is a sum equal to that part of the value of the premises which is attributable to the expenditure— of sums paid towards the expenses of the managers of an approved school under section 104 of the Children and Young Persons Act 1933; . . . of sums paid under section 51(3)(c) of the Powers of Criminal Courts Act 1973 or section 20(1)(c) of the Probation Service Act 1993 in relation to expenditure on approved probation hostels or homes. or of sums paid under section 3, 5 or 9 of the Criminal Justice and Court Services Act 2000 in relation to expenditure on approved premises (within the meaning of Part I of that Act). The appropriate compensation shall be paid— in the case of compensation payable under subsection (2), to the authority who were the responsible authority at the relevant time; and in any other case, to the Secretary of State. In this section— “ disposal ” includes the grant of a tenancy and any other conveyance, assignment, transfer, grant, variation or extinguishment of an interest in or right over land, whether made by instrument or otherwise; “ premises ” means any premises or part of premises (including land) used for the purposes of the home and belonging to the proprietor; “ the proprietor ” means— the voluntary organisation by which the home is, at the relevant time, provided; or if the premises are not, at the relevant time, vested in that organisation, the persons in whom they are vested; “ the relevant time ” means the time immediately before the liability to pay arises under subsection (1); and “ the responsible authority ” means the local authority specified in the instrument of management in question. For the purposes of this section an event of a kind mentioned in subsection (1)(b) shall be taken to have occurred— in the case of a disposal, on the date on which the disposal was completed or, in the case of a disposal which is effected by a series of transactions, the date on which the last of those transactions was completed; in the case of premises which are put to different use, on the date on which they first begin to be put to their new use. The amount of any sum payable under this section shall be determined in accordance with such arrangements— as may be agreed between the voluntary organisation by which the home is, at the relevant time, provided and the responsible authority or (as the case may be) the Secretary of State; or in default of agreement, as may be determined by the Secretary of State. With the agreement of the responsible authority or (as the case may be) the Secretary of State, the liability to pay any sum under this section may be discharged, in whole or in part, by the transfer of any premises. This section has effect regardless of— anything in any trust deed for a controlled or assisted community home; the provisions of any enactment or instrument governing the disposition of the property of a voluntary organisation.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This section applies when a controlled or assisted community home stops operating—either because the instrument of management is revoked or ceases to have effect under sections 56 or 57, or because the premises are disposed of or put to a different use (after 13 January 1987). The voluntary organisation that provided the home (or the person in whom the premises are vested) becomes liable to pay compensation.
The amount of compensation depends on the history of the home. If the home was controlled (or had been controlled before becoming assisted), the compensation equals the part of the premises’ value that comes from expenditure by the local authority that was the responsible authority while it was controlled. If the home was assisted (or had been assisted before becoming controlled), the compensation equals the part of the value that comes from grants under section 82 of this Act, section 65 of the Children and Young Persons Act 1969, or section 82 of the Child Care Act 1980. Special rules apply to premises that were formerly an approved school, approved probation hostel, or approved premises, referring to grants under the 1933, 1973, 1993, and 2000 Acts.
Compensation is paid to the responsible authority (if the home was controlled) or to the Secretary of State (in all other cases). Payment can be made by transferring premises instead of money, if the recipient agrees. The section overrides any trust deed or other rules about the voluntary organisation’s property.
When it applies
- A voluntary organisation closes a controlled community home and sells the building to a private buyer.
- The local authority revokes the instrument of management for an assisted community home, and the voluntary organisation must pay compensation.
- Premises used for a community home are converted into a private school, triggering the compensation obligation.
- A voluntary organisation buys a former approved school building, later stops using it as a community home, and the Secretary of State claims compensation for past grants.
- After a community home closes, the local authority calculates the amount due based on its past expenditure on the premises.
What this section does not say
- This section does not apply to voluntary homes (those are governed by section 60).
- It does not cover disputes about the day-to-day running of the home before closure.
- It does not set the compensation amount if the parties agree on a different method; it only provides default rules.
- It does not apply to premises disposed of before 13 January 1987.
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This page reproduces the text of CA 1989 s. 58 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.