Navigating Compulsory Purchase Compensation

Having dealt with many business valuations and disturbance compensation claims for Compulsory Purchase Orders in London (Olympics, Crossrail, Thameslink, etc) and throughout the country, I could not resist reading Lance Forman’s book Forman’s Games, in which he describes his experience of obtaining compensation following a CPO.

Soon after taking over this fourth-generation family artisan smoked salmon business employing 30, he had to deal with a several disasters, including a serious fire and then a significant flood, which required the firm to move to new premises as the flood water had rendered the old premises unfit for food production. Almost immediately after settling into their new site he discovered that it had been earmarked for the 2012 Olympic Games!

Lance took the view that nobody else, however professional they might be, would fight with the same fortitude and grit to protect his business as he was prepared to, so he decided to be exceptionally hands-on in his own defence as he put it. Obviously every hour he spent on letters or meetings with the Acquiring Authority, preparing for the public inquiry, speaking to journalists, was an hour he was not spending serving his customers or growing his business. He soon discovered that the rules on compensation for management time meant his “hands-on” approach was a considerable and unrecoverable financial burden.

He believes that the CPO compensation scheme is fundamentally flawed for businesses than need to relocate, not least because of the assumptions underpinning the way compensation is calculated. In his case, the Olympic Park was taking 560 acres of land around his site and so displacing many businesses. This created enormous demand for the few available sites and increased the likelihood that relocation costs would exceed the extinguishment value. He also found that site prices increased further when there was a need to move quickly. In the book he compares this to how theatre ticket prices increase as seats are sold. Many of us will have experienced this with airline tickets!

He is also critical of the rules dealing with betterment. He says it is almost impossible to find a building that is equivalent in size, and so the tendency is to take slightly larger premises with the attendant extra costs but these cannot be recovered.

Lance also felt the existing premises were belittled by describing the Olympics as a “regeneration project” and the land as “derelict”.

Lance was able to put his Cambridge University debating society experience to good use in negotiating his CPO move and compensation, and has written a very entertaining book. There are lots of humorous anecdotes in the book as well – it is well worth a read.

I went to see Lance at his new premises just opposite the Olympic Stadium. I am pleased to announce that Lance has agreed to share his views on how the CPO code needs to be changed at an event to be hosted by Vero Consulting on Wednesday 23 May in Middle Temple Hall, starting at 5.30pm. More details will follow shortly. If you would like to attend, please respond to me: charles.lazarevic@veroconsulting.expert or register with your email address at: https://veroconsulting.expert/contact/.

Charles Lazarevic

23 March 2018