Company wins compensation from council for loss of business

A council has been ordered to compensate the owners of an amusement arcade which lost business when a seaside pier was closed for safety reasons.

The case arose after the arcade owners became concerned about the structural integrity of the pier and commissioned a survey. It then provided a copy of the survey to the local authority in the hope that it would tell the owner of the pier to carry out repairs.

The council responded by giving notice that it was exercising its power under the Building Act 1984 to close the pier as it was unsafe to allow large numbers of people to use it.

The arcade sought compensation for loss of profit and diminution in the value of its business over a three-month period. The council responded by saying the arcade had forfeited any right to compensation by breaching its legal obligations to ensure that visitors and staff were safe on its premises.

The court found in favour of the arcade owners. It held that the fact that the council may have acted reasonably in closing the pier could not defend it against a claim for compensation. Otherwise, the fact that a local authority was properly exercising its powers would always be a defence to any claim, which could not be what the law intended.

Neither could the council claim the arcade had forfeited its right to damages by failing to ensure the safety of staff and customers. Those obligations related to occupiers’ liability, and health and safety legislation. They were not a requirement of the Building Act 1984, which was the legislation that obliged the council to pay compensation.

The arcade had not done anything to contravene the Building Act and it was therefore entitled to damages after the pier was closed.

Please contact Neil O’Callaghan if you would like more information about any litigation issue.