Stewart Christopher Chivers & Anor v St Helens Borough Council

A claimant seeking compulsory-purchase compensation for the prospective cost of surrendering a lease must prove, on the balance of probabilities, both a genuine liability under the lease and that a capital payment will in fact be required to secure release. A lease document and unexplained payment records will not suffice where the evidence indicates a more flexible arrangement and no surrender has been negotiated.

Pre-reference professional costs are recoverable where they were reasonably incurred and reasonable in amount. They must be distinguished from the costs of the Tribunal reference. Costs may be adjusted to reflect failure on a substantial discrete issue, even where the claimant has recovered substantial compensation overall.

Land used by the claimants’ car-sales business was compulsorily acquired to facilitate redevelopment of Newton-le-Willows railway station. The parties settled compensation for the extinguishment of the business and for the freehold of Plot B, but left two issues for determination by written representations.

First, Mr Chivers sought £450,000 for the anticipated cost of surrendering a purported sublease of an unacquired car showroom on Plot D. Secondly, the claimants sought pre-reference professional costs. The Tribunal later determined the costs of the reference following its substantive decision.

The central questions were whether Mr Chivers had proved a compensable lease-breakage loss, and what professional costs had been reasonably incurred before the reference.

1. Issue 1 dismissed. The claim for compensation for lease breakage failed. The claimant bore the burden of proving, on the balance of probabilities, that he would be required to pay a capital sum to secure a surrender of the showroom lease.
2. The evidence did not establish that proposition. The lease had not been registered, had been granted without the superior landlord’s consent, and appeared not to have been completed by payment of stamp duty. Those matters were not necessarily fatal, but the rental evidence did not show that the parties had treated the written lease as binding. It instead disclosed unexplained dealings involving cars, loans and contra payments.
3. In any event, no loss had been proved. There was no evidence of surrender negotiations, an agreed surrender premium, or an actual or inevitable payment. The claimant had retained use of the showroom. The future treatment of any award and leasehold interest was speculative.
4. Issue 2 allowed in part. The Tribunal confirmed that reasonable costs and expenses incurred in taking advice and formulating a compensation claim before the reference are recoverable, but are distinct from reference costs. It awarded £198,959.65 for valuation, legal, counsel, forensic-accounting, management-consultancy and limited taxation costs. The awards reflected the evidential support, proportionality, overlap and necessity of each head.
5. Reference costs. The claimants were overall the successful party because they recovered substantial compensation, but their costs were reduced to reflect their failure on the substantial lease-breakage issue. The Tribunal awarded £61,050 in reference costs and, under Rule 10(14) of the Tribunal’s 2010 Procedure Rules, directed the acquiring authority to pay the £3,979.19 determination fee.

This was a first-instance determination by the Upper Tribunal on a notice of reference. The judgment records that the parties had settled other compulsory-purchase compensation issues, leaving lease breakage and pre-reference costs for determination.