Judge rules on CPO ‘disturbance’ claim

Posted: 20th August 2012

A company’s claim for very substantial compensation for the disturbance caused to its business by the making of a compulsory purchase order (CPO) has been rejected by the Upper Tribunal.

Solartrack Plc transferred land and buildings at 42-44 New Road, Dagenham, Essex, to the London Development Agency (LDA) for £445,000 in March 2003, shortly before a compulsory purchase order in respect of the property was confirmed by the Secretary of State for Trade and Industry.

The company, which dealt in a range of electronic security and safety equipment, argued before the tribunal that the compulsory acquisition of its office premises had caused very significant disturbance to its business.

Solartrack submitted that its business was blighted from 1999, when the intention to make a CPO had become public knowledge. It was argued that ‘the shadow of the CPO’ had ruined the company’s prospects of achieving significant growth.

Lawyers for the LDA argued that Solartrack, which is still operating on a ‘skeleton basis’, should have relocated its business by at least 2003. Suitable relocation premises were said to be available and agreed relocation costs would have been paid by the LDA in advance.

Ruling on the case, the president of the tribunal’s lands chamber, George Bartlett QC, accepted the LDA’s arguments that Solartrack would not have been a profitable, or potentially profitable, business by 28 March 2003, when the freehold interest in the property was transferred to the LDA.

He said that, acting reasonably, the directors of the company would in those circumstances have decided to extinguish the business and offer the freehold interest in the property for sale.

He concluded: ‘In the light of those conclusions we consider that Solartrack’s claim for disturbance compensation is unfounded. There was no loss of profits, either short-term or permanent, nor did such fixtures and fittings and stock items as were in the company’s premises have any material value to the business.’

The LDA had accepted that Solartrack was entitled to be compensated for the cost of notional relocation to alternative premises and the tribunal awarded the company £72,500 under that head.