Jul 30, 2019

Company wins £8m after railways compulsory purchase

Railways stock image

Large infrastructure projects almost always require compulsory land acquisitions and that can also mean the extinction of thriving businesses. However, one company which suffered that fate reaped the benefits of professional advice when it was awarded more than £8 million in compensation.

The company operated a waste transfer station, skip hire and recycling business on a large leasehold site which lay in the path of a proposed new railway. The entirety of its trade was extinguished after the site was compulsorily acquired by Network Rail Infrastructure Limited. After no agreement could be reached on the amount of compensation payable to the company, the matter was referred to the Upper Tribunal (UT).

The UT rejected the company’s argument that its compensation should reflect the alleged shadow cast over its business by rumours of the impending acquisition. It did, however, enjoy an established customer base and a low debt ratio. But for the acquisition, there was no reason to think that it would not have continued to do well in the future.

Based on a multiple of its earnings before interest payments, tax, depreciation and amortization, the UT found that the company’s enterprise was worth £7,557,636. When compensation in respect of professional fees, staff costs and other losses arising from the acquisition were added to that sum, the company’s overall compensation came to £8,116,023 before interest.