Decision Nº ACQ 14 2007. Upper Tribunal (Lands Chamber), 09-02-2010
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS |
| Date | 09 February 2010 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | ACQ 14 2007 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2010] UKUT 30 (LC)
LT Case Number: ACQ/14/2007
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – compulsory purchase – travel agency and foreign exchange business – abortive move followed by double relocation – temporary loss of profits – directors’ and staff time – admissibility of late evidence – interim decision
IN THE MATTER OF A NOTICE OF REFERENCE
THE SECRETARY OF STATE FOR THE Acquiring
ENVIRONMENT, TRANSPORT AND THE REGIONS Authority
Re: 1-2 St Pancras Station Forecourt
Euston Road
London NW1 2QN
Before: A J Trott FRICS
Sitting at the Principal Registry of the Family Division,
First Avenue House, 42-49 High Holborn,
London WC1V 6NP
On 22 to 24 September 2009
Richard Harwood, instructed by Hammonds LLP, for the claimant
John Male QC, instructed by Cripps Harries Hall LLP, for the acquiring authority
The following cases are referred to in this decision:
D B Thomas and Son Limited v Greater London Council [1982] 1 EGLR 197
Pearl Wallpaper Holdings Limited v Cherwell District Council [1977] 2 EGLR 166
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This is a reference to determine the compensation payable to the claimant, TEB Travel Limited, following the compulsory acquisition of 1-2 St Pancras Station Forecourt, Euston Road, London NW1 2QN (the reference land). The acquiring authority is the Secretary of State for the Environment, Transport and the Regions.
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The claimant ran a travel agency and foreign exchange business from the reference land. It held the premises under a 15 year lease commencing on 30 September 1985. The claimant was holding over under the lease when the acquiring authority took possession on 5 March 2001 (the valuation date). The scheme underlying the acquisition was the Channel Tunnel Rail Link (CTRL) and the premises were acquired to facilitate the construction of the western ticket hall at St Pancras Station.
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It was agreed that compensation would be assessed on the basis that the claimant would relocate its business. The original plan was for the claimant to move temporarily into 23-27 Pancras Road. It took a six months lease of these premises from 17 February 2000 and fitted them out ready for occupation. But due to delays to CTRL the claimant was able to remain at the reference land until the valuation date. The claimant did not move to 23-27 Pancras Road but instead moved by agreement to 27 Euston Road, again on a temporary basis, pending a permanent move to the adjoining premises at 25 Euston Road. No.25 was not expected to be available until March 2002 but in the event the claimant was unable to occupy it until 13 March 2006 due to delays to the landlord’s redevelopment of the whole property of which No.25 formed part.
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The parties have agreed the majority of items of the compensation claim, including the disturbance costs of the abortive move to 23-27 Pancras Road, the temporary relocation to 27 Euston Road and the further move to 25 Euston Road. They have also agreed compensation in respect of excess rent at 27 Euston Road (the claimant being unable to make beneficial use of the whole of the accommodation that it leased) and professional fees. There are two items still in dispute; loss of profits of the business and compensation for directors’ and staff time incurred in connection with the moves.
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Mr Richard Harwood appeared for the claimant and called Mr David Stern FICA, MCIA, a partner in Vantis, as an expert accountancy witness and Mr David Feeley and Mr Nicholas Antoniou, both directors of the claimant company, as witnesses of fact.
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Mr John Male QC appeared for the acquiring authority and called Mr David Epstein FICA, AIT, Director of Forensic Accounting at Haslers, as an expert accountancy witness.
Facts
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The reference land is located at the junction of Euston Road and Pancras Road immediately south of St Pancras Station. It comprised a ground floor shop, offices and storage accommodation and shared WC facilities with the neighbouring newsagent. The entrance was onto Pancras Road but there was a display frontage to Euston Road. The agreed area of the property was 850 sq ft including the kitchen (991 sq ft including the shared accommodation).
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27 Euston Road is located on the opposite (southern) side of Euston Road to the reference land and is almost directly opposite Pancras Road. The claimant used it as temporary accommodation from March 2001 until March 2006. It comprised a ground floor and basement shop. The claimant did not use the basement (1,300 sq ft) or the rear part of the ground floor (310 sq ft). The ground floor area that it occupied amounted to 1,093 sq ft. 25 Euston Road (which adjoins No.27 to the east) is a shop unit on ground (390 sq ft) and first floor (311 sq ft) levels.
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The claimant’s business was divided into two parts, travel agency and foreign currency exchange/money transfer. Both parts of the business comprised corporate and retail customers. It is agreed that the corporate travel agency business was unaffected by the acquisition (it being mainly conducted remotely via telephone, fax, internet or e-mail). The retail (private) aspect of the business involved customers visiting the premises to make bookings or to change or transfer money. The claimant experienced an unusual level of Romanian currency transfer between 1998 and 2007 which declined after Romania joined the European Union. The claimant accepts that there was no decline in the Romanian business following the acquisition of the reference land and that it was unaffected by the scheme. The claim for loss of profits is therefore limited to the retail travel agency part of the business and to the foreign exchange business excluding the Romanian transactions. There is no claim for permanent loss of profits, the claimant arguing for temporary loss of profits between 2002 and 2008 inclusive.
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By the time of the hearing the parties had agreed various heads of claim in the sum of £309,935. The outstanding difference between the experts was in respect of the claim for temporary loss of profits which Mr Stern estimated to be £516,115 and Mr Epstein £7,630. The difference in respect of the other outstanding item, directors’ and staff time, was much smaller; Mr Stern estimated it to be £8,328 and Mr Epstein £2,161.
Late evidence
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At the start of the hearing Mr Male applied for a supplementary report prepared by Mr Epstein on 21 September 2009 to be admitted in evidence. The claimant objected to this application.
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Mr Male explained that Mr Epstein had written the supplemental report following receipt of the claimant’s accounts for the year ended 31 March 2009 on 17 September 2009. Until Mr Epstein received those accounts he could not be certain of the effect of the opening of the new St Pancras International Terminal on the claimant’s business. He had anticipated a positive effect in his expert report and in his rebuttal report he had said that the opening of the new terminal might lead to an unprecedented increase in the claimant’s (foreign exchange) profits arising from the increased footfall that it would generate. This increase in turnover was apparent in the accounts for the year ending 31 March 2008 (four and a half months after the international terminal had opened). The 2009 accounts had confirmed his view and he estimated that, subject to more detailed analysis, the benefits gained by the claimant in 2008 and 2009 were likely to continue in future years and would outweigh any foreign exchange losses suffered by the claimant as a result of the scheme.
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Mr Harwood argued that the acquiring authority should have raised the issue of enhanced business profits due to the scheme much earlier. It had not been included in its reply and Mr Epstein had only referred to it in a very vague way in his report and rebuttal. Mr Stern had not addressed the issue because there was no substance to the acquiring authority’s argument and in practical terms it was not a point before the Tribunal. Mr Epstein could, and should, have raised the matter when analysing the 2008 accounts. The claimant had not had the opportunity of considering the issue.
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I determined that Mr Epstein’s supplemental...
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