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Dreamland, Margate - Compensation Claim For Loan Financing Rejected

Alexander Booth QC
Rebecca Clutten

Dreamland Leisure Cinema Ltd  & Pavenham Holdings Ltd v Thanet District Council [2020] UKUT 0305

In a decision dated 17 November 2020 the Upper Tribunal (Lands Chamber) has rejected a claim for compensation against Thanet District Council, regarding interest which the claimant companies alleged had accrued in respect of a loan against premises which were compulsorily acquired.

The proceedings were the latest chapter in the dispute relating to the compulsory acquisition of the ‘Dreamland’ amusement park in Margate. In order to acquire the site the Council promoted the Thanet District Council (Land at Dreamland, Margate) Compulsory Purchase Order 2011, which was later subject to legal challenge in the Court of Appeal. The recent proceedings related to the compensation payable in respect of the Grade II* listed Cinema at Dreamland, of which the Council took possession in 2013. 

All heads of claim had been resolved between the parties save for that in respect of loan finance. In this regard, the Claimants alleged that the owner of the Cinema, Dreamland Leisure, had financed its acquisition of the premises by taking out a loan of several hundred thousand pounds from Pavenham Holdings. The Claimants alleged that the parties had entered into an oral loan agreement, and that interest had accrued at 10% on the loan throughout the seven years since the compulsory acquisition had taken place.

The Council contested liability, disputing both the existence of the loan and the alleged liability to pay interest. The Council further argued that the Claimants had failed to mitigate their loss, by neglecting to inform the Council of the existence of the loan until the submission of its Statement of Case.

The parties called expert evidence from forensic accounts and compensation surveyors. Following a four day hearing, the Tribunal rejected the claim concluding that it was not satisfied as to the existence of the oral loan agreement. The Tribunal also found that the Claimants had failed to mitigate their losses. 

Alexander Booth QC was instructed by Andrew Swaffer of Sharpe Pritchard on behalf of the Compensating Authority. Rebecca Clutten was instructed by Tim Brookes of Gateley Legal on behalf of Dreamland Leisure Cinema Limited.