Cemex UK Operations Limited v Secretary of State for Transport

In assessing disturbance compensation for compulsory acquisition, the claimant’s actual financial position must be compared with the position in the hypothetical no-scheme world. The assessment may include future profits, but only for a period capable of reliable prediction. It should not assume indefinite continuation where future procurement, competition, technology and market conditions cannot properly be forecast.

Whether a minimum guaranteed volume continues after a supply contract expires is a matter of construction. Where later extensions or short-term agreements are separately negotiated as to price and volume, an earlier guarantee does not automatically apply. Under rule 16(2) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, formal evidential rules do not govern the Tribunal, but fairness may require it to disregard untested re-examination evidence.

Cemex UK Operations Limited sought compensation after the compulsory acquisition in 2020 of its Washwood Heath factory and land for the HS2 project. Its sleeper-manufacturing business ceased there, then resumed at a smaller and less favourably located site at Rochester.

Most compensation items had been agreed. The outstanding dispute concerned loss or gain in the sleeper business. The Tribunal was required to compare past and future profits in the real world with those in a no-scheme world in which HS2 had been cancelled and Washwood Heath remained available.

This was an interim decision. Having heard factual and sleeper-market evidence, but not yet the forensic accountants, the Tribunal determined the factual assumptions on demand, contractual terms, market share and business duration to be used in the later quantum exercise.

1. Issues determined in an interim decision. The Tribunal did not quantify the claimant’s compensation. It made the factual and contractual findings required for the parties’ forensic accountants to calculate any loss or gain, and reserved the final determination.

2. Compensation for compulsory purchase includes disturbance and requires a comparison between the real world and the no-scheme world. The Tribunal found that Network Rail’s requirement for sleepers in 2017/18 to 2019/20 had been understated by about 225,000 in aggregate. It directed the accountants to use the resulting annual requirement figures rather than reconstructing demand by reallocating stockpiled sleepers.

3. The Tribunal rejected both experts’ numerical forecasts of future demand. It found that the most reliable estimates were average annual requirements of 350,000 sleepers in CP7, 450,000 in CP8 and 600,000 in CP9. These figures reflected restricted resources and changing maintenance demands, while allowing for later recovery.

4. The claimant’s continued sleeper business could not responsibly be modelled beyond 2036 in either world. By then, further procurement, changing technology, competing suppliers and alternative materials made its prospects too uncertain. In the real world the Rochester operation was likely to continue to 2036, with an agreed 30% market share. In the no-scheme world Washwood Heath would also be modelled only to 2036.

5. The minimum guaranteed volume in the 2012 contract did not automatically continue into later extensions and short-term agreements. Those agreements were separately negotiated as to price and volume. In the no-scheme world, the claimant would have had about 50% of the market from April 2017 until the P3 contract, at updated 2016-contract prices.

6. For the no-scheme P3 contract, prices would have reflected the claimant’s non-compliant P2 bid for Washwood Heath, adjusted for inflation. There would have been no minimum guaranteed volume. The claimant’s probable market share was 50%. Loss of a storage area did not alter that conclusion because the remaining site could store sufficient sleepers.

The accountants were directed to exchange further reports using these findings. A further hearing was listed for September 2025 if the parties could not resolve quantum.

Upper Tribunal (Lands Chamber): Interim decision determining factual and contractual assumptions for the later assessment of compulsory-purchase compensation.

The judgment records that a separate High Court challenge to Network Rail’s procurement process was discontinued. It was not an appeal in this reference.