Compulsory purchase orders

One of our experts was appointed by the claimant, SME (Hammersmith) Ltd, an operator of a KFC franchise at Farringdon that was compulsorily acquired by TfL as part of the Crossrail development. As part of the proceedings, we provided expert witness evidence to the Upper Tribunal (Lands Chamber) which contributed to a landmark decision being awarded in favour of SME.

Our expert contended, based on his experience and a comparable transaction some 18 months before possession, that the loss the owner suffered should be based on a multiplier of 17 times the agreed annual profit. TfL’s expert contended that the multiplier should only be seven times the profit and relied on a comparable transaction which had taken place three months after possession, as well as the fact that in Upper Tribunal proceedings, there had never been an award of more than seven-and-a-half times the annual profit. After a three-day hearing at the Royal Courts of Justice, SME’s evidence was preferred and an award was made of 14 times the agreed annual profit.

One of our experts was instructed to value some retail outlets in a shopping centre on the instruction of the property developers, in contemplation of a compulsory purchase order being made. While we only had information that was publicly available, we provided a general assessment of the compensation that may be required if the order were to be made. This provided invaluable insight to the developer, which assisted with their budgeting and decision-making process.

The business was able to relocate to new premises, but suffered substantial loss of profits in doing so, in addition to the costs of the new production facility. Moore Kingston Smith prepared loss-of-profit calculations that were highly complex due to the nature of the counterfactual scenario, which required detailed financial modelling of the profits the company would have achieved but for the compulsory acquisition of its premises. A settlement figure was agreed at mediation, to the satisfaction of our client.

This compulsory purchase case was complex and Moore Kingston Smith’s involvement spanned a period of five years. During this time, the forensic accounting team gained a detailed understanding of the business and its products, customers and scope for growth, which was essential in modelling its losses.

The client company director said: “Working with the forensic accounting team at Moore Kingston Smith was a real pleasure. They understood our business in detail and were able to articulate our financial standing perfectly. A thorough service offered by a strong professional team. Highly recommended.”