The principles of compensation are governed by the Compensation Code. One of the main principles within the Compensation Code is that of “equivalence”, i.e. a claimant should be placed in no better or worse position (in financial terms) after the acquisition than they were prior to the acquisition. Therefore, in addition to the value of land/property, a claimant is also entitled to additional compensation, normally referred to as “disturbance”.
Disturbance compensation includes all costs reasonably associated with the CPO. The actual level of compensation will vary from claim to claim and is dependent upon the claimant’s specific circumstances.
Some examples of typical items of disturbance we come across include the following:
- Permanent Loss of Profits
- Temporary Loss of Profits
- Adaptation to new Premises (discounting for betterment)
- Refurbishment
- Removal Costs
- Bank Interest on Overdraft
- Stationery Costs
- Stamp Duty
- Personal Time
Acquiring authorities are, however, generally unable to compensate any items of disturbance without any supporting evidence. As a claimant, it is therefore important that any supporting documentation be collected throughout the process.
For example, if a claimant is looking to recover personal management time, it is important to keep a timesheet detailing every minute spent on matters relating to the CPO as opposed to the running of the business. Or, for example, when claiming for removal costs or fit-out costs, it is important to keep all invoices of costs incurred as a direct consequence of the CPO. We have experienced situations whereby a client has been unable to claim a cost under disturbance due to being unable to evidence the cost with the required supporting documentation, such as the invoices for the cost.
The Compensation Code states that it is the claimant’s duty to mitigate their loss. Therefore, supporting evidence is also required to show that the claimant has been financially prudent. For example, we have acted on behalf of a scrap yard business that needed to relocate due to a CPO. Weighbridges are a fundamental piece of machinery for a scrap yard business. Quotes were undertaken to assess which would be cheaper: relocate the client’s existing weighbridge or purchase a new weighbridge for the new property. The acquiring authority presented and approved the latter after it proved to be cheaper. Furthermore, as a specialist adaptation, the client was able to claim 100% of the cost, with no discount for betterment.
Disturbance claims often require specialist knowledge of the specific requirements of the claimant’s business. We therefore require detailed client input to provide insights and justification around why certain items claimed under disturbance are a necessity for the business and why other (possibly cheaper) options are not suitable. For example, we have acted for a clothing manufacturing company needing to relocate due to a CPO. To prevent any damage to the stored clothing, very specific temperature controls are required within the warehouse. A specialist heating and cooling system was therefore required within the replacement property. This had to be clearly communicated to the acquiring authority in order for the claim to be considered ‘reasonable’.
If your business is affected by a CPO, please contact the team to discuss further.