Compensation for bad business?

3 September, 2012

The Upper Tribunal of the Lands Chamber has recently considered a claim for compensation by a failing company in Solartrack PLC v The London Development Agency [2012] UKUT 158 (LC). The claimant company was seeking disturbance compensation as a result of a compulsory purchase order (‘CPO’) in relation to its trading premises, which it claimed had led to the failure of the company and the redundancy of its employees. However the Tribunal held, after considering expert forensic accounting evidence from both sides, that the company had already been in decline and that the CPO was not the cause of its failure. As a result the directors should have dissolved the company in 2003 or 2004, and mitigated its losses. In light of their conclusion the Tribunal held that the company’s claim for compensation was unfounded, but the company was awarded £72,500 as the defendant acquiring authority’s case throughout had been that the company was entitled to the cost of notional relocation to alternative premises.