Automated Summary
Key Facts
Warren James (Jewellers) Limited relocated from 18 Charter Place to 23/24 Intu Watford following a compulsory purchase order by Watford Borough Council. The tribunal determined a permanent loss of profit of £318,469 after adjusting for higher occupational costs in the new property, including rent, service charges, and rates. The relocation resulted in a 90% increase in annual costs compared to the original property, and the claimant exercised a break clause in 2020, leading to a two-year rent-free lease. Compensation included £131,618.85 for relocation costs and £184,045 for temporary loss of profit.
Issues
- The tribunal determined if the claimant's higher overheads (rent, rates, service charges) at the relocation property, compared to the reference property, warranted compensation for permanent loss of profit. This involved analyzing value for money under the legal framework of 'equivalence' and rebutting the presumption that the relocation property's costs were justified by its benefits (e.g., footfall, location).
- The tribunal assessed whether the claimant was entitled to compensation for temporary loss of profit incurred during the relocation period (2016–2017). This included evaluating the impact of disrupted trading, the methodology for calculating lost profits (net vs. gross profit approaches), and adjustments for costs saved during closure.
Holdings
- Statutory occupier's loss payment £1,760.00
- Permanent loss of profit £318,469.00
- Disturbance compensation: Relocation, fit out and general costs (agreed) £131,618.85
- Total £647,510.95
- Temporary loss of profit £184,045.00
- Professional fees (pre-reference) (agreed) £11,618.10
Remedies
- Statutory occupier's loss payment of £1,760.00.
- Pre-reference professional fees (agreed) amounting to £11,618.10.
- Relocation, fit out and general costs (agreed) amounting to £131,618.85.
- Temporary loss of profit awarded at £184,045.00, covering partial trading years 2016 and 2017.
- Permanent loss of profit awarded at £318,469.00, calculated based on increased occupational costs and adjusted for post-relocation savings and Covid-19 impacts.
Monetary Damages
647510.95
Legal Principles
- The burden of proof required the claimant to demonstrate that the respondent's presumption of value for money was rebutted by showing (1) no suitable alternative properties existed with comparable costs and (2) the relocation property's benefits did not justify the increased overheads. This aligns with Brandon LJ's guidance in Bibby that claimants must prove they had no choice but to incur higher costs and derived no offsetting benefits.
- The court applied the presumption of value for money under the Land Compensation Act 1961 (Rule 2) for relocation costs, as established in Service Welding Ltd v Tyne and Wear County Council and J Bibby & Sons Ltd v Merseyside County Council. This presumption holds that claimants receive fair value for relocation premises unless proven otherwise. The principle of equivalence from Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 11 was also referenced, requiring causal connection, remoteness, and mitigation of loss for disturbance compensation claims.
Precedent Name
- Director of Buildings and Lands v Shun Fung Ironworks Ltd
- J Bibby & Sons Ltd v Merseyside County Council
- Service Welding Ltd v Tyne and Wear County Council
Cited Statute
- Land Compensation Act 1973
- Land Compensation Act 1961
Judge Name
- Mark Higgin FRICS FIRRV
- Diane Martin MRICS FAAV
Passage Text
- We determine that the claimant's profit level at the reference property was not exceptional, and the additional burden of higher property overheads in the relocation property can be directly attributed to the relocation, resulting in a compensatable permanent loss.
- The average annual occupational costs of the relocation property (£162,112) were nearly double the reference property's costs (£79,383), with the difference assessed as permanent annual loss of profit (£82,729).
- The Tribunal determined the reference as follows: Disturbance compensation including relocation costs (£131,618.85), temporary loss of profit (£184,045.00), permanent loss of profit (£318,469.00), and statutory occupier's loss payment (£1,760.00), totaling £647,510.95.