WKD Trained Dogs Ltd v Secretary of State for Transport

Compensation for compulsory acquisition must reflect the claimant’s position had the land not been taken, including its special value to the owner and business disturbance. If the business cannot relocate, its extinguishment is assessed by its value to the owner, not mechanically by open-market value. Market comparators remain useful, but buyer-specific risks that would arise only on a sale should not reduce the value of a business assumed to continue in the same ownership. An appropriate allowance may be made for the owner’s work to avoid overcompensation. Losses claimed during the shadow period must be proved on the civil standard as caused by the scheme. An acquiring authority alleging avoidable loss must identify the reasonable steps said to have been available and prove their likely effect.

WKD Trained Dogs Ltd operated a dog-training and sales business from Brookhouse Farm. The Secretary of State for Transport acquired the farm for the HS2 scheme, and the business closed in January 2023 after no suitable replacement premises could be found. The parties agreed the land value and several other heads of compensation.

The Upper Tribunal was asked to determine the disputed compensation for losses during the period when the business was threatened with relocation or closure, and the value of the business on extinguishment. The principal disputes concerned whether the scheme caused the decline in trading performance, how to value the extinguished business to its owner, and whether the company could recover for its sole director’s time spent pursuing the compensation claim. The claims arose under rules 2 and 6 of section 5 of the Land Compensation Act 1961.

1. Compensation determined. The Tribunal determined compensation at £4,907,348, with interest at the statutory rate from the valuation date, the amount of interest to be agreed.

2. The principle of equivalence required compensation, so far as money could achieve it, to put the claimant in the position it would have occupied if the land had not been taken and the business had not been affected. The land’s value to its owner included its special value as a business site and disturbance losses. Where a business could not be relocated and had to close, its going-concern value was the prima facie measure of loss, consistent with Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111.

3. Business losses were recoverable if caused by the scheme, not too remote, and not losses a reasonable person would have avoided. The claimant had to prove the amount of loss caused by the acquisition on the civil standard. The Tribunal rejected the suggestion that shadow losses required a different approach. If the acquiring authority alleged that reasonable steps would have reduced or avoided loss, it had to identify those steps and prove both their likely effect and that a reasonable person would have taken them.

   The Tribunal attributed substantially the whole decline in the trained dog rate to the scheme, including the effects of changed sourcing and reduced morale. It considered the pandemic’s effect marginal in the counterfactual where the business was free of scheme-related pressures. The claimant did not prove that the scheme caused the asserted online-sales losses. The Tribunal deducted £56,643 for additional residential-training income used to mitigate loss and assessed shadow losses at £1,330,524.

4. Extinguishment value had to reflect value to the owner, with open-market evidence as a useful reference rather than a complete answer. A notional allowance for the director’s remuneration was required to reflect the cost of his contribution; the Tribunal allowed £50,000 annually. Minimal record-keeping did not justify a lower multiplier where the business had been competently operated, although the value still had to be proved. Risks arising only from a change of ownership, including possible loss of the proprietor’s knowledge and relationships, were not relevant to a business assumed to continue in the same ownership. Applying the guidance in Shun Fung Ironworks and the assumed proper-marketing approach in Transport for London (formerly London Underground Ltd) v Spirerose Ltd [2009] UKHL 44, the Tribunal adopted a 5.5 multiplier and assessed extinguishment value at £2,701,419.

5. A company claiming compensation for its director’s time spent on the reference had to prove that the company itself suffered a loss. The Tribunal applied Lancaster City Council v Thomas Newall Ltd [2013] EWCA Civ 802 and distinguished Quyoom & Ors v The Borough Council of Middlesbrough [2025] UKUT 274 (LC), where the claimant had claimed for his own time. As the company proved no loss beyond the Secretary of State’s concession, only the conceded £28,743 was included. The Tribunal stated that the concession should not be treated as a precedent.

6. The total included £362,000 for the land, £233,314 in pre-reference costs, £120,712 in other costs, £52,150 in statutory loss payments and £78,486 for additional corporation tax liability, as well as the shadow-loss, extinguishment and director-time awards.