Warren James (Jewellers) Limited v Watford Borough Council

Compensation for disturbance following compulsory acquisition must reflect the claimant’s actual loss, subject to causation, remoteness and mitigation. A presumption that replacement premises provide value for money may be rebutted where the claimant had no suitable alternative and obtained no sufficient benefit from the additional operating costs.

In assessing permanent loss from relocation, the tribunal must identify whether increased overheads were caused by the acquisition and distinguish them from losses attributable to wider trading conditions. Compensation may be assessed by reference to the difference between pre-acquisition and replacement property overheads where that difference represents the continuing loss.

The claimant’s leasehold retail premises were compulsorily acquired for a town-centre redevelopment. The claimant relocated its jewellery business to premises in a shopping centre, incurring substantially higher occupational costs.

Relocation costs and certain professional fees had been agreed. The disputed issues were the amount of temporary loss of profit during the interruption to trading and whether the claimant suffered compensatable permanent loss of profit from the higher costs of the replacement premises.

The tribunal considered the statutory compensation framework, the availability and suitability of alternative premises, the value-for-money presumption, and the competing accounting evidence.

1. Temporary loss. The claimant had suffered temporary loss of profit caused by the interruption to trading. The tribunal preferred a net-profit approach based on the store’s management accounts, but rejected reliance on the exceptionally high profit achieved in the final pre-acquisition year as an unrealistic benchmark. It assessed the loss by reference to the average net profit in the three preceding years, producing compensation of £184,045.
2. Permanent loss and alternative premises. The presumption that a claimant obtains value for money when taking alternative premises is rebuttable. The relevant questions were whether suitable alternatives existed which would have avoided the increased costs and, if not, whether the benefits of the replacement premises made those costs worthwhile. Applying the approach in Service Welding Ltd v Tyne and Wear County Council (1979) 38 P&CR 352 (CA) and J Bibby & Sons Ltd v Merseyside County Council [1980] 39 P&CR 53, the tribunal found no equivalent alternative premises.
3. Continuing loss. The replacement premises were the only suitable option, but their average occupational costs were nearly 90 per cent higher. The claimant’s reduced turnover could not be attributed solely to relocation because footfall had also declined for wider reasons. The tribunal nevertheless found that the additional burden of the higher property overheads was directly attributable to the relocation and represented a permanent loss.
4. Assessment and order. Permanent loss was assessed by comparing average replacement-property overheads of £162,112 with average pre-acquisition overheads of £79,383, applying a multiplier of 6.23, and deducting saved rent and Covid-19 rates relief. Compensation for permanent loss was £318,469. Total disturbance compensation was determined at £647,510.95, with statutory interest and post-reference costs potentially payable in addition.

First-instance determination by the Upper Tribunal (Lands Chamber) on a notice of reference. A right of appeal to the Court of Appeal on a point of law existed with permission.