Acquisition of leasehold premises — Claim for land taken and disturbance — Whether permanent loss of profits established — Award of £13,550 in answer to claim of £43,422
In 1969 the claimant acquired a seven-year lease of premises at 28 Sheep Street, Northampton; he used these for his business as an estate agent dealing in houses. In October 1972 the acquiring authority took possession of his interest following a notice to treat and a confirmed compulsory purchase order. In July 1972 the claimant obtained a lease of 20 Sheep Street, for a term of five years and at a rent of £1,020, to which he moved his business.
The claimant claimed £3,478 for the three-and-half year residue of his lease; £9,215 for disturbance items, including removal expenses and expenditure on adapting the new premises; £4,912 for temporary loss of profits in the year of removal, based on the loss of 25 house sales multiplied by £196.48; and £25,817 for permanent loss of profits, being a claim for the partial extinguishment of the business. The last item involved six steps in the calculation: determination of the net profit for 1972 (£16,374); its comparison with succeeding years to 1984 adjusted by reference to the RPI to allow for inflation; the deduction from these figures of the actual adjusted net profit figures for the same years; calculation of the difference between these figures for a five-year average (53%); the calculation showed that the base adjusted net profit of £16,374 had decreased over the years 1973 to 1977 to 53% of that figure, namely £8,678; that final sum was multiplied by three and half years’ purchase and deferred two and half years to produce £25,817.
Held 1. The leasehold interest was valued as business premises and not as a shop; the sum awarded was £2,000.
2. The sum of £7,365.78 was awarded for disturbance items. These included abortive pre-removal (Harvey) expenses, certain costs of adapting the new premises, removal expenses, notification to clients and dual overheads during the removal period.
3. The sum of £4,161.25 was awarded for temporary loss of profits, based on 25 house sales at the average fee for 1972 of £166.45.
4. The use of the RPI was too sophisticated in connection with the claim for loss of permanent profits; the alleged loss had not been proved to have been caused by the dispossession and it was too remote. The causative link between the loss and the compulsory purchase order had not been established and this claim item was rejected.
David Smith (instructed by Field Fisher & Martineau) appeared for the claimant and called Norman Winbourne FRICS and Christopher Farrar FCA; and James Inch (solicitor to the Northampton Borough Council) appeared for the acquiring authority and called Derek Wilson FRICS, previously chief estates officer to Northampton Borough Council.
