Compulsory Purchase - compensation for businesses
Phil Osborne, 29th April, 2020
In the second of a two-part blog focussing on compulsory purchase,, Litigation Partner, Phil Osborne, answers some of the questions most frequently asked by clients about compensation for the compulsory purchase of land.
My land has been or is going to be compulsorily acquired, can I claim compensation?
Any person with an estate or interest in land that is acquired compulsorily has a right to claim compensation. The statutory framework for assessing compensation is set out in the Land Compensation Act 1961 and the Land Compensation Act 1973.
The compensation that can be claimed will depend vary in each case however, may include the following heads of claim:
1. The open market value of the land taken by the Acquiring Authority
This is the amount which the land would sell for assuming it was being sold on the open market by a willing seller.
This head of compensation aims to compensate the landowner for any losses suffered as a result of being dispossessed. The underlying principle is that of “equivalence” meaning that the land owner should be no worse or no better off as a result of the compulsory acquisition. By way of example, a business owner might claim for temporary loss of profits or extinguishment of the business and the costs of relocating the business to new premises.
3. Compensation for damage to any land that is retained by the land owner. This head falls into two categories:
Injurious Affection: Where the value of the retained land is reduced because of works authorised by the CPO, even if no land has actually been acquired from the land owner.
Severance: Where the value of land retained by the land owner is reduced because of its severance from that part of the land that has been compulsorily acquired.
In addition, the land owner can claim the reasonable legal and other professional fees it has incurred, such as those of solicitors, surveyors and accountants and interest on compensation.
What practical steps can I take if I think I have a claim for compensation?
You should keep a complete record of all communications you have with the Acquiring Authority. You should also keep detailed records of all expenses incurred and losses sustained by you including the original receipts, invoices and accounts.
For business owners it can be helpful to keep a photographic schedule recording the property and the surrounding area both before and after the CPO and in some cases obtain footfall surveys so that any impact on the business as a result of the exercise of the CPO can be evidenced.
You are under a duty to mitigate any loss you suffer as a result of the compulsory acquisition of your property. This means that you are required to take reasonable steps to reduce the amount of any losses. For example, this could include carrying out a reasonable search for alternative premises to relocate your business. You should therefore keep a record of the criteria that you have used to identify potential relocation sites, the details of those sites, why they are or are not suitable and details of any negotiations to acquire an interest in those sites.
If your losses are increased as a result of your actions, or your failure to take action, you will not be entitled to compensation for those additional losses.
What happens if I cannot agree the amount of the compensation with Acquiring Authority?
If you are unable to agree an appropriate figure for the compensation with the Acquiring Authority, you are entitled to refer the claim to the Upper Tribunal (Lands Chamber), which will determine the correct amount of compensation.
How long do I have to issue a claim for compensation?
The time limit for issuing a reference is 6 years however, the point at which the clock starts to run is difference depending on whether the Notice to Treat or General Vesting Declaration (GVD) procedure has been used.
Where a Notice to Treat has been served, a reference cannot be made more than 6 years from the date the Acquiring Authority enters your property following service of the Notice to Treat and Notice of Entry.
Where a GVD procedure is used, the time limit is also 6 years however, time starts to run from the date the property became vested in the Authority (i.e. the Vesting Date) or from when the person claiming compensation first knew, or could be reasonably expected to have known, of the vesting of the interest in the property, whichever is the earlier.
How can Gosschalks help?
Partners Phil Osborne and Matthew Fletcher are experienced in acting for various national high street retailers in pursuing claims for compensation against Authorities across the country, including in relation to Thameslink and Crossrail projects and are able to advise you in relation to any claims you have.
How much do you charge for your services?
Generally speaking, we believe the fairest way to conduct our business is to charge you for the actual time that we spend acting on your behalf. This ensures that you only pay for the advice you require. Our fees are normally recoverable from the Authority.
Many surveyors offer their services on the basis that you will pay them a commission. The problem with this type of arrangement (particularly with higher value claims) is that it may lead to excessive fees being paid to the party’s representative, particularly in circumstances where a quick resolution is achieved. Moreover, in circumstances where a fair compensation settlement cannot be agreed and the matter has to be referred to the Upper Tribunal then expert witnesses are strictly prohibited from working on a commission basis and this can cause difficulties where the Claimant has committed themselves to paying commission to a surveyor who will not be in a position to act as an independent expert witness on their behalf.
Do you act on a ‘no win, no fee’ basis?
In circumstances where it is necessary to refer a claim to the Upper Tribunal, we are able to consider acting on what is known as a discounted conditional fee agreement whereby we reduce our upfront charges in return for the payment of a success fee in the event that the claim is successful. However, the amount of the success fee is not recoverable from the Authority.
Is it possible to achieve a settlement through mediation?
We are strong advocates of mediation which is a process by which the parties to a disputed compensation claim seek to resolve the claim through the appointment of an independent mediator who will seek to facilitate a negotiated settlement. This enables claims to be resolved quickly with significantly less costs being incurred. We have links with some of the most reputable mediators in the country.
Will I need to instruct a barrister?
If a claim needs to be referred to the Upper Tribunal then it may be necessary for us to instruct a barrister depending on the size, value and complexity of the claim. Barristers typically provide specialist input on the drafting of Court documents and also deal with the advocacy at the final hearing. Their fees are generally recoverable from the Authority in the event of a successful outcome. We have links with the best barristers in the country who specialise in acting for Claimants.
What should I do next?
If you have been served with notice of the making of a CPO and would like advice as to whether you can object to the making of the CPO, or your land is to be compulsorily acquired and you would like to seek compensation, please contact Phil Osborne by telephone on 01482 590256 or by email at firstname.lastname@example.org.