Compensation for loss of profit under the Land Compensation Act 1961 requires a comparison of the claimant’s financial position in the real world, now and in the future, with its position in the “no scheme world”.
The Upper Tribunal (Lands Chamber) has considered this in Cemex UK Operations Ltd v Secretary of State for Transport [2025] UKUT 138 (LC) making findings to allow forensic accountants to prepare reports.
Cemex claimed compensation following compulsory purchase of its factory and land at Washwood Heath Birmingham in 2020 for the HS2 rail link. Its three businesses were relocated. Its factory for the manufacture of railway sleepers moved to Rochester in Kent. Cemex was entitled to compensation for the value of the land taken, relocation costs, lost profits, professional fees and other miscellaneous costs. The main outstanding issue between the parties was the loss of profits of the sleeper business.
Cemex sought just over £59m arguing that it had a successful business at WWH, in an ideal location close to the West Coast Main Line, with an annual capacity of 600,000 sleepers and a favoured position in the market because of its efficiency, flexibility and expertise. It had lost its premises, was unable to produce sleepers for two years and had now resumed production using a less profitable method from an inferior location.
The compensating authority argued there was a high demand for sleepers 2002-2016 but that demand dropped off after that and was at an all-time low. The claimant’s competitor was operating efficiently and was now the majority supplier.
The principal customer for concrete sleepers was Network Rail. It was agreed that in a no scheme world, Network Rail’s past and future requirement for sleepers was the same as in the real world and that Cemex would have continued to supply it with sleepers from WWH at prices agreed in September 2016, adjusted for inflation.
The tribunal identified Network Rail’s requirement for sleepers for the years 2018-2025 at more than 3.36m (an average of 440,000 per annum 2019-2024) and future requirements based on averages over Network Rail’s spending periods to 2036 ranging from 350,000-600,000 per annum.
Rochester was undoubtedly an inferior location to WWH. It was smaller, with an annual capacity of 200,000 sleepers, challenging access conditions and away from the West Coast Main Line. Alternative sites to both WWH and Rochester would need to be considered from 2036.
Cemex’s claim to have had 60% of market share up to 2016 was undisputed. The tribunal found that its market share from 2017 would have been 50% reducing to 30% by 2036.
Louise Clark is a property law consultant
