Dreamland Leisure Cinema Limited & Anor v Thanet District Council

A claimant seeking disturbance compensation for interest on an alleged loan must prove, on the balance of probabilities, an enforceable liability to pay that interest. A tribunal cannot infer an oral interest-bearing loan merely from a charge, incomplete transactional documents, later correspondence, or accounts which are inconsistent with the asserted arrangement.

Under rule 6 of section 5 of the Land Compensation Act 1961, a recoverable loss must be caused by the acquisition, not too remote, and reasonably incurred. Although late disclosure of an interest claim may amount to a failure to mitigate, that issue does not arise where the underlying loan obligation is unproved.

The first claimant owned the Dreamland Cinema, which vested in Thanet District Council under a compulsory purchase order on 3 September 2013. Compensation for the property’s value and other heads of claim had been settled. The only outstanding issue was the claimant’s claim for interest allegedly payable to the second claimant, Pavenham Holdings Ltd, on a £475,000 oral loan used to acquire the cinema.

The claimant alleged that interest was payable at 10% per annum, compounded monthly, and that delayed compensation prevented repayment. The acquiring authority denied that an enforceable loan agreement had been proved. It also contended that any loss was unreasonably increased because the interest claim was first raised in the statement of case nearly six years after acquisition.

1. The claim was dismissed. The claimant had not established, on the balance of probabilities, that it had entered into an oral loan agreement with Pavenham requiring payment of interest. Accordingly, no compensable interest loss was proved.
2. The documentary record did not support the pleaded and subsequently advanced case. The 2013 transfer and deed of variation did not refer to a loan from Pavenham to the claimant on the asserted terms. The deed of variation capped enforcement against the property at £475,000, together with specified enforcement costs. It did not establish a separate personal liability for interest.
3. The claimant’s case was unsupported by direct factual evidence. Its pleaded case attributed interest to the charge, while counsel relied on an unpleaded oral agreement. Neither expert supplied evidence proving that agreement. The later emails and letter referred generally to a verbal arrangement, but gave insufficient reliable detail about its formation, parties, or enforceable terms.
4. The inconsistent accounts and changing calculations of rate, compounding period, and amount weakened the alleged arrangement. The Tribunal could not safely infer an open-ended unsecured interest obligation at 10% from those materials.
5. Under rule 6 of section 5 of the Land Compensation Act 1961, the parties agreed that causation, remoteness, and reasonable conduct were relevant conditions. The Tribunal did not need to determine mitigation. Obiter, had a loan been proved, the claimant’s failure to disclose the interest liability until August 2019 would have been a significant failure to mitigate. The Tribunal would have awarded at most interest accruing after that date.

not stated in the judgment.