UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2015] UKUT 253 (LC)

UTLC Case Number: ACQ/4/2013                                                                                           

                                                                             

                         TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

 COMPENSATION - Compulsory purchase of 0.49 acre waste transfer station required pursuant to the London 2012 Olympic Park development - disturbance - loss of opportunity to expand business - temporary loss of profits - additional costs of new site not providing value for money – increased costs due to temporary relocation -  professional fees - Land Compensation Act 1961 section 5, Rule (6)  - compensation determined at £671,004

 

 

                               IN THE MATTER OF A NOTICE OF REFERENCE

 

 

 

BETWEEN                      G & B COMPRESSOR HIRE LIMITED                      Claimant

 

 

                                                                           and

 

 

                                         THE GREATER LONDON AUTHORITY                   Acquiring                                                                           Authority

 

 

 

re: Land at Ruckholt Road, Temple Mills, London E10 5PB

 

                                                                             

                                                       Before: P R Francis FRICS

 

                        Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL

 

on

 

19 – 23 January 2015

 

Romie Tager QC, instructed by Colman Coyle, solicitors of London N1, for the claimant

Rupert Warren QC, instructed by Eversheds LLP, solicitors of London EC2, for the Acquiring Authority

 

 

The following cases were referred to in evidence and/or argument:

 

Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111

Horn v Sunderland Corporation [1941] 2 KB 26

Smith v Birmingham Corporation (1974) 29 P&CR 265

Bibby & Sons v Merseyside County Council (1977) 34 P&CR 101

Service Welding Ltd v Tyne & Wear County Council (1979) 38 P&CR 352

DECISION

Introduction

1.             This is a decision to determine the compensation payable by the Greater London Authority (referred to hereafter as “the GLA”) (as successor to the London Development Agency (“LDA”)) to  the claimant G & B Compressor Hire Ltd (referred to hereafter as “GBM” or “the Company” or “the claimant”) for business losses alleged to have occurred following the Company’s enforced relocation from its waste transfer site at Ruckholt Road, London, E10 (“the reference land”) to a new site at 3 Scarab Close, Silvertown, London E16 1DF (“the relocation premises”) via a short-term temporary site at 2A Thames Wharf, Dock Road, Silvertown E16 (“the temporary premises”).  

2.             The compulsory acquisition was due to the reference land (along with many other sites) being required in connection with the construction of the Olympic Park following the award by the International Olympic Committee on 6 July 2005 of the 2012 Olympic Games to London. The London Development Agency (Lower Lea Valley, Olympic & Legacy) Compulsory Purchase Order 2005 (“the CPO”) was made on 16 November 2005 and confirmed by the Secretary of State on 18 December 2006.  Notice to Treat and Notice of Entry, both dated 12 January 2007, were served in respect of the reference land, which comprised Plots 125, 126, 127 and 128 in the  CPO Schedule, and entry was taken on 31 January 2007, that being the date of valuation for the purposes of this reference.

3.             Mr Romie Tager QC appeared for the claimant, and called Mr Brian Huckle, his wife Sheila Huckle and his sons Ben and Patrick Huckle who all gave evidence of fact.  He also called Mr Julian Braddock who gave evidence relating to the potential weighbridge installation on the reference land, Mr Neil Harris in connection with commercial vehicle financing, Mr Jimmy Shroff FCA who gave brief evidence regarding his involvement with the claimant in accountancy matters, Ms Jennifer Watts BSc LL Dip MCIWM who gave expert evidence on waste management matters and Mr Jeffrey Nedas FCA, who gave expert forensic accountancy evidence.

4.             Mr Rupert Warren QC appeared for the GLA and called Mr David Clarke MRICS who gave factual evidence relating to his consultancy role with the GLA and his involvement in negotiations regarding the acquisition of the reference land, Mr Colin Cottage BSc (Hons) MRICS IRRV who gave evidence in respect of his role for the GLA as appointed surveyor in negotiations for the acquisition of this and other sites, and his professional opinion in connection with the remaining aspects of the claim.  Mr Rainer Zimmann Dip Ing (FH) C Eng MCIWM MCIWEM MVDI gave expert evidence in respect of waste management and environmental matters, and Mr Gordon Hodgen FCA gave expert forensic accountancy evidence.

The Claim

5.             It was agreed between the parties that the lease and tenancy under which the claimant occupied the reference land had no premium or capital value and that, therefore, there was no entitlement to compensation for any value in the land under section 5, Rule (2) of the Land Compensation Act 1961 (“the 1961 Act”), and no claim under that rule was made.  Although no claim was made for an Occupier’s Loss Payment pursuant to section 33C of the Land Compensation Act 1973 (“the 1973 Act”), Mr Cottage for the GLA was of the view that there was an entitlement under this head and calculated it at £4,992.50. This entitlement and the calculation were subsequently agreed, and the sum will thus form part of the compensation determined in this decision.   

6.             The figures which were set out in the claimant’s statement of case to this Tribunal dated 5 February 2013, were predicated entirely under section 5, Rule (6) of the 1961 Act, and can be summarised thus:

Loss of trading profit                            £1,400,000

Relocation costs                                    £   346,000

Increased operating costs                      £1,225,000

Professional fees (to be assessed)             

Total                                                      £2,971,000 plus professional fees

7.             Whilst the statement of case only set out the amounts being claimed in summary form, the figures therein were, as Mr Cottage described, broadly consistent with, but did not correspond exactly to, the full claim that had been made to the GLA on 1 November 2010 in Mr Nedas’s first report of 29 October 2010.  That report, which was referred to during the hearing as “Nedas 1”, provided the forensic detail to support the claim which at that time totalled £3,074,373 after allowing for an initial advance payment, but did not quantify a claim for claimant’s time.  

8.             Mr Nedas’s expert witness report dated 14 January 2014, referred to as “Nedas 2” incorporated a number of revisions to Nedas 1 together with a claim for known losses in the financial years ending 31 March 2011 and 2012.  The total claim became £2,767,610 to which was added a further sum of £118,415 for “known level of increased annual costs” (beyond 31 March 2012) but this element was withdrawn on the last day of the hearing.  However, there were perhaps inevitably some further amendments made during the course of the proceedings and a revised summary schedule was produced on 5 February 2015 setting out the parties’ final positions thus:   

 

 

Claimant                                              GLA

Loss of trading profit                            £1,284,025                                          £  91,101

Relocation costs (moves to both                                                          

temporary and relocation premises)       £   346,702                                          £294,324

Professional fees                                    £   259,648                                          £199,905

Specific costs not yet incurred              £    38,770                                           £ -

Increased operating costs                      £  651,604                                           £ -

New fleet vehicle costs                         £  431,584                                           £ -

Occupier’s Loss Payment                      £      4,993                                           £   4,993

                                                               £3,017,326                                          £590,323

Less Advance payments received         £   387,304*                                        £387,304*

Total                                                      £2,630,022                                          £188,507

·                     In addition to these advance payments, the GLA has paid £139,491 directly to the claimant’s advisors in respect of pre-reference fees pursuant to arrangements made directly between those advisors and the GLA, and thus that sum is not included within the claim.

Facts

9.             The parties helpfully produced a preliminary statement of agreed facts and issues, and the waste management and accountancy experts also produced agreed statements.  From these, together with the evidence (which included a DVD showing the reference land and buildings, which are now subsumed within what is now known as the Queen Elizabeth Olympic Park), counsel’s skeleton arguments and their comprehensive closing submissions (which were received by 27 February 2015), I find the following facts.

10.         The reference land, which lay within an Air Quality Management Area (AQMA), was located on the east side of Temple Mills Lane, off Ruckholt Road, E15 and formed part of a larger area of otherwise vacant and unused land that belonged to the Secretary of State for Transport (“SoS”) and lay between Temple Mills Lane and the National Express East Anglia railway line.  The claimant had also occupied part of the SoS land, outside the areas that were formally demised to it, on an informal licence basis up until March 2005 (referred to as the L&C land because London & Continental Railways were the occupiers of a wider tranche of the SoS land) but had relinquished it when it was required by the SoS for other purposes.   The reference land itself consisted of two regularly shaped main parcels separated by an electricity pylon, but they were linked by a service road that ran to the eastern side of them.  Plot 127 (on the CPO Schedule) was the northernmost of these two areas and extended to 826 sq m. It comprised the main waste transfer and recycling area that had a base of compacted earth and was enclosed by timber panel fencing on steel posts.  This part of the reference land had the benefit of a Waste Management Licence. Vehicular access to the yard was over a joint access (not part of the reference land) on the northern boundary shared with another waste management company, Messrs Bywaters, who had a larger site immediately to the north. That entrance also gave onto a track (not part of the reference land) which facilitated access between plot 127 and the other main area, plot 128.

11.         Plot 128 lay to the south of the pylon and extended to 1,043 sq m.  It did not have the benefit of a WML but was used for skip storage, vehicle repairs/maintenance and a workshop in connection with GBM’s business. Plots 127 and 128 were the subject of a lease for 5 years dated 16 March 2005 between the SoS and GBM (trading as GB Mack’s Skips) of the first part and Brian Edwin Huckle of the second part (as Guarantor), at a rental of £28,000 pa.  The permitted use was as “a waste transfer station including the parking of motor vehicles skips and loading machinery and as the site of a Portakabin used as offices for the waste transfer station.”  The lease included rights of way (shared with others) over the entrance and access track referred to above, and was determinable by the landlord on giving 6 months written notice, or by the tenant on giving 3 months written notice.   

12.         Plots 125 and 126, extending respectively to 58 sq m and 38 sq m, comprised an area to the north-east corner of the shared entrance to the main waste management yard (Plot 127) and was occupied by GBM’s yard office.  Those plots were the subject of a tenancy between the SoS and GBM for two years from 16 March 2005, at a rental of £2,000 pa, determinable by either landlord or tenant on giving 3 months written notice.  The permitted use was “the storage of plant and machinery vehicles and the placement of a temporary site office.”  No mains electricity was connected to any of the site, but mains water and drainage were available.

13.         The whole of the reference land extended to 1,996 sq m (0.49 acre).

14.         At the valuation date, GBM’s business comprised primarily skip hire and the operation of the waste transfer station.  The Waste Management Licence (No. WML80154) (“the WML”), only covered the area occupied by Plot 127, but there was some question over whether the WML covered the whole 826 sq m or whether it covered an area of 810 sq m.  However, I do not consider this material.  Since it was first obtained on 19 January 1993, the WML had been subject to various modifications.  It was originally granted to a Mr Timothy McCarthy but was subsequently transferred to GBM on 15 July 1999 when it acquired the business of GB Macks Skips which was previously operating from the land.  It was subject to a condition prohibiting the reception or handling of waste except between the hours of 07:30 and 17:00 Monday to Friday and 07:30 to 13:00 on Saturdays.  No operation was permitted on Sundays or Public Holidays.  The quantities of waste were limited to 200 tonnes per day on Mondays to Fridays (inclusive) and 100 tonnes on Saturdays.  There was a restriction on the amount of storage on a defined area to 130 tonnes “at any one time” and to a height of no more than 2.5 metres.  Part of the waste control provisions stated that “waste received on any day shall be removed by the end of the following full working day”. Paragraph 2.4.1 of the conditions stated that “the types of inert and general putrescible waste to be handled at the facility are defined.”

15.         On or about the valuation date GBM relocated to the temporary premises (extending to some 3,520 sq m (0.87 acre)) which it occupied rent-free and which did not have the benefit of planning consent for a waste transfer station or a WML, until October 2007 when the Company then moved to the relocation premises about 100 m away.  Both these sites were approximately 4 miles from the reference land (6 miles by main road) and form part of an area known as Thames Wharf which was developed by the GLA specifically to house waste and recycling businesses that had to relocate as a consequence of the CPO.   Thames Wharf lies between Silvertown Way (A1011) and the River Thames to the west of the Royal Docks and south of Canning Town in a predominately industrial and commercial area.  Access from Scarab Close via Dock Road is available to the main A13 Trunk Road within about 800 metres.   The need for the double-move was due to the fact that at the date the claimant was required to vacate the reference land, the relocation premises were still in the process of being made ready for occupation.

16.         The relocation premises have the benefit of the requisite planning consent (obtained by Arup on behalf of GLA) and extend to an area of approximately 3,804 sq m (0.94 acre).  The site has a concreted yard, a large open-fronted waste processing building of about 850 sq m (9,149 sq ft) with 9.0 m (29’6”) eaves height, a vehicle maintenance shed and Portakabin type offices.  The site has the benefit of mains electricity (connected in August 2009), water and drainage. 

17.         The relocation premises are the subject of an Agreement for Lease from the GLA dated 29 March 2007 for a term commencing on 5 October 2007 and terminating on 1 July 2014 at a rent for the first two years of £73,702.80 pa, for the third year £77,797.40 pa and for the fourth and fifth years of £81,892 pa and with a review on the fifth anniversary of the term.  The user is described as “skip storage and hire, and as a waste transfer station within Class B1(c), B2 and B8 of the Schedule to the Town and Country Planning Use Classes Order 1987, and ancillary to this use for offices.”  It is a full repairing and insuring lease, and there is provision for the lessee to pay a fair and proper proportion of the landlord’s service costs, including provision of estate services and maintenance of the roadway.  Although the lease had not been completed by the date of this hearing, GBM has been paying the rent as if it had, but not the service charge (which has not been demanded since 2008).  The lease is to be contracted outside the security of tenure provisions of the Landlord and Tenant Act 1954.

18.         A WML for the relocation land was granted in the name of G & B Compressor Hire Ltd by the Environment Agency on 11 June 2007.  It covered an area some 40 sq m greater than that covered by the WML on the part of the reference that was licensed.  Table 2.2 permitted an annual maximum waste throughput of 57,200 tonnes.  The only reference to a daily waste limit, of 50 tonnes, is in connection “Physico-chemical treatment” in accordance with section D9 of the Schedule of licensed activities.  The licence restricted all waste processing operations to the licensed area (which was the case also at the reference land), but additionally specified that they had to be carried out “within a building”. 

19.         It was agreed that the legal principles to be considered in respect of this reference were unlikely to be contentious, but reference was made to Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111 generally and Horn v Sunderland Corporation [1941] 2 KB 26, Smith v Birmingham Corporation (1974) 29 P&CR 265, Bibby & Sons v Merseyside County Council (1977) 34 P&CR101, and Service Welding Ltd v Tyne & Wear County Council (1979) 38 P&CR 352 in respect of disturbance. 

Issues

20.         The positions of the parties, in terms of quantum relating to the disputed heads of claim, are set out in the schedule in paragraph 8 above. A concise summary of the matters to be determined was provided in the respondent’s skeleton argument thus:

(1)                    Whether the claimant has suffered any loss by virtue of increased costs associated with the relocation premises.

(2)                     Whether the claimant has suffered any loss of profits, either due to the impact of the acquisition on (a) its core, existing business, or (b) any plans to introduce new business streams, or both.

(3)                    What losses the claimant has suffered by (a) having to tip away waste (now agreed at £107,286), (b) having to relocate, (c) fitting out the relocation premises, (d) acquiring new vehicles, (e) professional fees and (f) directors’ time.

The claimant’s case

21.         In his witness statement, Mr Brian Huckle explained that he was the founder of the business which he originally established with a friend, Gordon, in about 1969 hiring out mobile compressors (hence the company name).   He said he eventually bought out his partner, and the Company was incorporated in 1972 by himself and his wife Sheila who were, and are, the sole shareholders and directors. Over the ensuing years with the assistance of his wife, who was effectively Company Secretary and had worked to obtain the Waste Management Industry Training and Advisory Board Certificate of Technical Competence, the business expanded into skip hire, vehicle hire and also the provision of tipper lorries to the London Borough of Wanstead.  In 1985 they purchased a site at Cowslip Road, South Woodford and in 1986 acquired a mini skip hire business called T & R. 

22.         By the early 1990s the business comprised the hire of skips and the disposal of waste from them was via other companies that operated waste transfer stations.   In 1995, the claimant acquired the business of Macks Skips which was at the time trading from the reference land and operated its own waste transfer station.  The site was open and did not include a building for the processing of waste, but had a WML.  Therefore, from that time, the claimant was able to process the waste from skips collected from customers into waste for recycling and that which had to be tipped into landfill, and traded as GB Macks Skips.  In 2001 Mr Huckle’s eldest son Ben joined the business and after learning all the various aspects, became the “front line” of the firm.  Mr Huckle’s daughter Lynsey and his younger son Patrick also joined the firm, and as there were now many more mouths to feed, the decision was taken to expand the business. 

23.         Being a small family concern, Mr Huckle said that they did not have formal board meetings, and minutes of the informal family gatherings to discuss business matters (usually at an annual get-together) were never taken. The family see each other all the time at work, and situations evolve rather than being the subject of any sort of business plan.  He said that, having seen how their neighbour, Bywaters, had expanded and moved into new lines of business, the family agreed that steps should be taken to expand into those areas – which would include hook loaders (larger roll-on, roll-off skips known as “Ro-Ros”), waste compacting and wheelie-bins, especially as the skip hire side of the business had begun to plateau.        

24.         Mr Huckle went on to explain these various new business lines and how they operated.  He started with hook loaders as one of the key areas of dispute between the parties was whether or not a decision not to proceed along this particular avenue was caused by the impending CPO, the resultant alleged loss of potential profits forming a significant part of the claim.  He said that hook loaders were basically a larger form of skip hire.  It involved providing customers with much larger waste containers (several times the size of a single skip).  They are collected and delivered by a hook loader truck that hauls the skip onto its platform and slides it off.   In order to be able to offer that service, they would need to invest in larger trucks and larger containers, and they would also have needed the facilities to store the containers when they were not in use.  As this part of the business would be charged out on the weight of the loaded container rather than the size of the skip, it would be necessary to install a weighbridge.  The principal source of business for these larger containers was through brokers (middle-men) with other sources being hospitals, factories, schools and large development sites.

25.         The compactors were also very large containers which had the inbuilt facility to compact materials as they were loaded by customers. They belong to the customer rather than the Company, and collection and delivery would be by the same hook loaders, charging being again based upon weight, so a weighbridge would also be essential for this.  On the subject of weighbridges, Mr Huckle said further income could be derived from this by allowing other businesses to use it.  The wheelie-bin collection and delivery service had also been considered, but Mr Huckle accepted that this was not something that was any longer being pursued, and that side of the business did not form any part of the claim. 

26.         Mr Huckle said that in or around 2004, they had been advised that the reference land might be needed in connection with the Olympic Games if London was successful in its bid, and that even if it was unsuccessful (Paris being the clear favourite) there was a possibility that it would be acquired in any event for a major regeneration project in the area. This, he said, produced a considerable amount of uncertainty as to their future occupation of the site and despite some initial searching in the area, it did not appear that there were any alternative sites nearby to which they could move.  There may have been an opportunity to move further away (Dagenham for instance), but that would mean them losing much of their local and passing trade.  Nevertheless, at the annual family get together on 3 January 2005 at Ben’s house, they discussed the need to move the business forward and took a decision to press on with their plans in respect of the Ro-Ros and Compactors.  It was the general consensus within the family that London would not win the bid and alternative regeneration, if it was to happen at all, would be a very long way off.  He insisted that the proposed broadening of their business lines at this point in the Company’s development was an essential and timely addition to GBM’s activities.  Indeed, Mr Zimmann accepted that it had been a fairly obvious step to take in the light of the developments in waste management generally.

27.         In cross-examination on this aspect of the claim, Mr Huckle insisted that Mr Zimmann’s opinions relating to the capability of the site for the establishment of new business lines were simply wrong.  GBM ran the business and knew what they were doing.  Further, it was also considered that there would have been room for the weighbridge to be located just outside the entrance gates, on the shared access area, in any event.

28.         So, following the family’s decision in January 2005, initial contact was made with EDF energy to see about getting mains electricity to the site, new hook loader vehicles were investigated and despite some very attractive deals being available through Mercedes-Benz to include servicing and maintenance, they initially considered obtaining funding for a hook loader he had seen advertised at £35,000.  Nevertheless, they did eventually go for the new Mercedes-Benz trucks. Sheila Huckle contacted Mr Neil Harris of ABN Finance with whom they had dealt previously, and he confirmed it would not be a problem, and commenced making arrangements for the installation of a mains electricity supply principally to power the weighbridge.  Enquiries were also made through Mettron for a weighbridge, and Ben placed an order with them towards the end of April (through Mr Julian Braddock).  Second hand large skips could be acquired for about £1,000 each and after an initial meeting with their new accountant, Mr Jimmy Schroff, to discuss potential for tax reliefs on vehicle finance, it was, Mr  Huckle said, felt that everything was falling into place, and they were ready to go.

29.         However, in the early part of 2005, there were other things going on that prevented the new business lines being developed as quickly as they would have liked.  London & Continental had decided that by 24 March 2005 it wanted the one and a half acres of land back that GBM had previously been occupying for skip and vehicle storage under the terms of a separate lease. It was a major project to vacate this area, especially as over the years a very large amount of spoil had been allowed to build up on it, and it all had to be removed, as did a large number of scrap vehicles that had been left there.   Also, at the same time, GBM was in negotiations to renew its lease and tenancy on the reference land, so it was March or April 2005 by the time they were in a position to move forward with the business expansion plans.

30.         But, Mr Huckle said, in July 2005 it was announced that London had been successful, and with the prospect of losing the reference land now being extremely likely, it was decided to put all the plans on hold as it would not make economic sense to make this investment in the existing site if it was likely to be taken away from them at any moment.  The order for the weighbridge was thus cancelled, but they lost the deposit that had had to be paid.  The mains electricity installation was also cancelled. As a result, it was not until 2009 that they could actually proceed with the new lines of business, and GBM had thus lost three years worth of profit from that potential income stream.  There was absolutely no reason, he said, why the success and increased level of profitability that had occurred subsequent to starting the new lines of business at the relocation premises would not have been just as good at the reference land. 

31.         Mr Huckle said that the question of why they did not start the new business lines until 2009 was answered by the fact that, not only was there a considerable amount of distraction caused by the need for a move, including all the time that had to be spent looking at alternative premises, and then eventually negotiating the deal relating to the relocation premises, but also there was the nine month period where they had had to occupy a wholly unsuitable site, with no planning permission and no WML.  Hence they were unable to process waste during this period and had had to pay tipping-away costs (that aspect of additional cost having now been agreed by the parties).  Then, there was the move to the new premises and the time it took to settle in and re-establish the business there.  Mr Huckle said that the company’s main thrust up until it did eventually start the new lines of business was to retain their original customer base.  Another delaying factor was that the mains electricity supply for the relocation premises, which should have been connected by October 2007, but was not provided until August 2009.

32.         As to their occupation of the temporary premises, Mr Huckle said that apart from the additional tipping away costs to which he had referred, there had been a serious effect on profitability during that transitional period as all they were able to do was struggle to survive.  The site could only be effectively used for storage of vehicles, and nothing of any value could be left overnight either in the temporary vehicle workshop or in the temporary office as there was no security.  The site was not fenced and staff thus had to take home tools, computers and other valuable items every night. The main thrust of what they were doing during this period was to try and retain their customer base as best they could.

33.         Regarding the preparation for the move, Mr Huckle explained that once they knew they had to go, it was realised there would be a lot of competition for sites as there were a number of other waste transfer businesses that were being dispossessed due to the Olympics.  They took the view that it would be in their interests to co-operate with LDA who were at the time handling matters, and who told them about three potential sites that might be suitable at an initial meeting held on 16 May 2005 at which he, Sheila and Ben were present, along with their then solicitor, and Andrew Dunwoody of LDA, Mr Cottage and others.  Of those sites, the one at Beckton to which they eventually moved, and which was GBM’s second preference in terms of location, had been acquired by LDA specifically for the relocation of waste transfer businesses that were to be dispossessed.  It was some 4.7 miles away from the reference land by a short-cut route, but 6.4 miles away by the main road which the skip lorries had to take.

34.         Mr Huckle said that they were not asked at the 16 May meeting about any future plans for expansion into new lines of business, and in cross-examination vociferously refuted the suggestion that this was because they had no such intentions at the time.  Although he had said, at paragraph 137 of his witness statement, that “... at that stage our plans were in any event on hold because of the CPO” he insisted that that was an incorrect statement, and it was not until the announcement was made in July that the decision was made to park those plans for the time being.  He insisted that if they had been asked at the meeting, they would have informed LDA of their intentions.

35.         It was put to Mr Huckle by Mr Warren that GBM was advised by letter from Mr Gareth Blacker of the LDA dated 21 December 2004 that the land they occupied at Ruckholt Road (i.e. what eventually became the reference land) would be required whether or not the Olympic bid was successful. The letter stated, in part:

“Although you do not have an interest in a property within the Olympics Zone itself, the LDA has identified that it will need to acquire your property in order to deliver the Games.  Even if London is unsuccessful in its application to host the 2012 Games, the LDA remains committed to delivering a major regeneration scheme within the lower Lea Valley.   To this end, the LDA has done a great deal of work to identify specific areas where we believe that major public sector investment will enable us to deliver significant economic development and regeneration benefits for the Lower Lea area.

 I can confirm that your premises are in one of the areas that the LDA will require in order to deliver its regeneration proposals.  The LDA is therefore keen to acquire your interest, whether or not London is awarded the Olympic Games.

The purpose of this letter is to:

-          Confirm that the LDA intend to acquire your property interest

-          Provide you with information about next steps.”

 

Enclosed with the letter was a Summary Information Schedule seeking information from the recipient.  

36.         In response, Mr Huckle said that the letter had been sent to GB Macks Skips at 151 Ruckholt Road which was not the correct address, and that he did not recall receiving it – hence the Schedule having never been returned. However, he said that he was aware of the regeneration plans (which had been talked about as long as they had been occupying the reference land) but remained of the view that that would be “way off in the future”.  Mr Warren then reminded Mr Huckle of the letter that he had signed and sent to Mr Andrew Gaskell at LDA on 4 January 2005 which read:

“We write to confirm that we have instructed the Professional Team consisting of Finers Stephens Innocent LLP, Balcombe Group PLC and Chesterton to act as negotiators, project managers and retained expert advisors in respect of negotiations and possible agreement with the London Development Agency in connection with the Olympic Games (and London’s bid in respect thereof) and/or the plans for regeneration of the Lower Lea Valley.”

Mr Huckle said that that letter had been drafted and sent to him by Finers Stephens Innocent (FSI) for signature and he had returned it to them for onward transmission to the LDA.  He accepted that he had received the letter of 27 January 2005 from LDA written in response and confirming the limited fees undertaking that had been proposed, because it had been correctly addressed.

37.         On the suggestion that GBM must by then have known that the reference land was going to be acquired, Mr Huckle insisted it was purely a question of timing. He was still of the view that (a) London was unlikely to be chosen for the Games and (b) if it was unsuccessful and the land was needed for regeneration, that would be “way off in the future” and could have been “years and years”.  However, he accepted that he had no information or evidence to support that view, that he had not at any time contacted LDA for an indication of timing and that there was a possibility it could have been within a year or two.  

38.         With the claimant’s statement of case having stated that the family had been considering and planning the new business lines since the early 2000s, Mr Huckle was asked why the decision was not made sooner – say in 2003 rather than the very day before he had signed the letter confirming the appointment of the specialist advisers. He responded by saying that every year the family talked about such things in general rather than specific terms, but acknowledged that there was no documented evidence as to the precise point at which turning from the general plan to a specific intention was made, for the reasons that he had previously given.  Having made the specific decision to proceed, Mr Huckle said that there was no particular timetable although it was planned to make a start as soon as possible. 

39.         It was pointed out that in one paragraph of his witness statement he referred to the second half of 2005 and in another he said “by 1 April 2006”.  He said that there was no notional or specific timetable as the development of the new lines had to be fitted in with the day to day running of the business, and he accepted that one of the things that could affect their intentions was the acquisition of the land by the LDA.

40.         Then asked about the importance of the weighbridge, because the ordering of it was one of the factors used by the claimant to prove the company’s intent, Mr Huckle accepted that the Environmental Waste returns could be estimated and it was not essential for weighbridge readings to be used.  Indeed, the historic policy of GBM had been to photocopy a large number of blank forms with the box asking if a weighbridge had been used having completed with the word “No”.   They were then filled in with the estimated tonnages but he accepted that they had been dilatory in forwarding these to the EA and large numbers had been sent in 2006 after the EA had chased for them. He accepted that the copy waste returns from a period after the eventual installation of the weighbridge also showed that it had not been used, but explained this by saying that they inadvertently continued to use the pre-copied waste return forms.         

41.         Mr Huckle was then asked about a workshop that had been organised by LDA “to discuss your current business operations and to determine your business needs for the Thames Wharf site” in July 2006.  Prior to the meeting, LDA had asked GBM to complete a questionnaire setting out the size and extent of their existing business.  That questionnaire, he said, was clearly aimed at establishing what GBM’s existing operations were; he did not recall Ove Arup asking what their future plans were and he did not mention them in it.  Neither were their plans mentioned at the meeting, as it was, he said, simply to ensure that the design and layout of the premises would be suitable.  Mr Huckle insisted that there was no reason to go into what their plans were particularly as he was concerned about commercial confidentiality as Ove Arup were also talking to other waste management operators.  The only additional matter that they needed to be sure about in respect of their plans was that there was room on the site for a weighbridge – which they told Arup they required, and one was then shown on the plan that they prepared.  In all other respects, he said, there was nothing different required from what was already available at the reference land. 

42.         Whilst he accepted that the questionnaire had asked for the Company’s “prediction of future waste streams (type and tonnes)”, and he had just referred in answer to the fact that they might increase the number of skip lorries from seven to ten (within the WML allowance of 12), he said what they were planning to do was not important to Arup (other than the weighbridge which GBM would of course pay for themselves) because he had been told, as far as the new site was concerned, that “you can only have what you have already got.”  He acknowledged that the relocation site was nearly twice as large as the reference land, but the point he was making was that he had been told (only verbally) that they could only reinstate what they already have on the new site.  The larger site would simply give them more room to work.

43.         Turning in cross-examination to the evidence relating to loss of profits, Mr Huckle accepted that he had not asked Mr Camblin, one of his originally appointed professional advisers who attended a meeting with LDA in November 2006 on GBM’s behalf, about any concerns he had regarding loss of profits from the potential new lines of business.  He said that whilst he had told him about the new business proposals, he had not asked him to relay that to the LDA when considering the potential loss of profits claim because there was at that time a dispute about Mr Camblin’s fees.  However, he accepted that it was not until Mr Nedas’s first report of October 2010 that any question of a claim in respect of the new business was raised.  This was because the prospect of obtaining compensation under this head only came up at a meeting with Mr Allen of FSI (his then solicitors) in 2009, by which time Mr Camblin had long since left the scene. Mr Huckle explained that Mr Allen had asked, when discussing compensation, what items should be taken into account.  Mr Huckle told him that they had now [in 2009] started doing ro-ros which they had intended to do earlier.  That was when Mr Allen said ‘Well there may be a loss of profits claim there.  I’ll put you onto a forensic accountant to quantify it”.  It was following that suggestion that Mr Nedas came on the scene, and produced his first report quantifying the loss of profits claim on 29 October 2010.  Mr Huckle admitted that the personal statements of himself and his wife which were appended as an exhibit to Mr Nedas’s report, and set out the background to the Company, its historical development and the effects of the CPO was dated 27 October, two days before Mr Nedas’s first report was issued.  That statement had been dictated to and compiled by Mr Alistair Hipperson, the accountant who had been brought in initially to assist with the formulation of the claim.

44.         On the subject of Mr Hipperson, Mr Huckle said that his fees were being disputed by the GLA, and whilst he accepted that not all of his fees could be compensatable, their claim for 20% of them was entirely justified as he had done much of the groundwork upon which Mr Nedas relied.    

45.          In his witness statement, Mr Huckle refuted any suggestion that the reference land would not have been large enough to accommodate the new lines of business in any event, and when asked why they had said to LDA they would like a site of 1.5 acres when all they had at Ruckholt Road was 0.49 acres, he said that was a “wish list” type of request, but “we didn’t get that did we? We got 0.94 acres.”  There was, he said, an expectation that when L&C had finished with the land, it would be offered back to them but he accepted that there was nothing in writing about that.  There was no question of the extra land that they now have at Scarab Close enabling them to earn increased profits from the new lines of business because the rent there was treble what they had been paying at the reference land.  The only reason why he had said at a meeting with LDA in July 2006 that their current site was too small was in respect of skip storage, rather than its operational capabilities.  In any event, there were plenty of other local sites that they could have rented for that purpose until such time as the L&C land became available again.  

46.         In connection with the WML, Mr Huckle said that they had not been operating to capacity and there was no reason why the new lines of business would take them beyond the limits set by the licence.  In his view, even if they did, he thought it would be a formality to get it altered.

47.         In summary, Mr Huckle said that he was in no doubt whatsoever that had it not been for the initial threat, and ultimately the reality of, the CPO, GBM would have gone into these new lines of business from the reference land.  They would have acquired the vehicles and other items necessary much earlier and by no later than the second half of 2005 and, as a result, the business had lost profits for the intervening period in the amounts set out in Mr Nedas’ report.  On the question of the decision that was eventually made to purchase brand new rather than second hand vehicles which they had traditionally done, Mr Huckle said the considerable extra mileage that would have to be covered to continue servicing their local customer base meant they needed efficient and reliable equipment.

48.         Mr Patrick Huckle, Mr Brian Huckle’s youngest son said that he recalled the family gathering on 3 January 2005 and the discussion about hook-loaders and ro-ros.  He was still at school at that time studying for his A-levels, but worked in the site office on Saturday mornings. 

49.         Mr Jimmy Schroff is a chartered accountant who has acted for GBM since 2005.  He confirmed that at his first meeting with Mr & Mrs Huckle on 28 April 2005 he gave them some purely verbal advice regarding tax reliefs on vehicle finance.

50.         Mr Neil Harris of ABN Finance confirmed Mrs Huckle’s evidence regarding the company’s enquiries over vehicle finance.

51.         Mrs Sheila Huckle said that she had been seconded to contact Mr Neil Harris at ABN Finance as her eldest son Ben had already identified a potentially suitable hook-loader to buy, and they were looking to purchase two of them.  She produced her diary entry from the week commencing 7 March 2005, and a copy of a note she had made following her discussion with him.  He had confirmed that £40,000 could be made available, but he might need to see the Company’s accounts. She said she also contacted EDF Energy and made enquires about the installation of mains electricity (although there was no documentary evidence available) to power the new weighbridge.  She confirmed an order for the electricity supply in May 2005, verbally she thought, but this had to be cancelled in July when London’s successful Olympic bid was announced.  There was no cost involved as EDF had not, by then, started any work.   Mrs Huckle also confirmed there had been a meeting with Mr Jimmy Schroff on 28 April 2005 where the question of tax reliefs was discussed.

52.         Mrs Huckle reiterated what her husband had said about the plans for the new business lines, and said that she was sure there would have been no problem in respect of the WML.  She had obtained a qualification in waste management, and it was she who had all the dealings with the Environment Agency.  She said she always found them very helpful and cooperative.

53.         In cross-examination, Mrs Huckle was asked a series of questions about the veracity of the diary note of Monday 7 March 2005, reminding herself to ring Mr Harris about vehicle finance.  She could not recall precisely when she wrote that entry – it may have been the previous Friday, but it might have been on the Monday morning – even though that was the day she rang him.  Asked why she had included the reason for the call in the diary note, even though she knew what it was about, Mrs Huckle said “that’s what I do”.   In the light of the fact that Mr Huckle had said records of meetings and decisions are not kept as a matter of course, she was asked how it was that she had been able to find the note of  the conversation she had with Mr Harris and whether, in fact, it had been written in 2013 as an attempt to corroborate the evidence.  She insisted that the diary note was absolutely genuine, and the note of the conversation would have been written by her immediately following her conversation with Mr Harris, and left for her husband “on the kitchen table” as she often worked from home.  She said this was common practice, and she would regularly leave a pile of notes for her husband to read when he returned home from work.  She said she had found the note in a box of papers that she had in her entrance hall.  They did not have a filing system as such. Mrs Huckle accepted that there was no such note relating to the meeting with Mr Schroff, or in respect of the electricity supply order. 

54.         Regarding her husband’s evidence that he had not seen the LDA’s letter of 21 December 2004, Mrs Huckle said they had not received it, although she was aware, from 2004 or earlier, of talk relating to the possibility that the reference land might be required, and was aware of the letter appointing experts that her husband had signed on 5 January 2005.  She said that the 21 December letter had been addressed to Ruckholt Road, whereas the correct address was Temple Mills Lane, although she accepted that the postcode was correct.    Asked in re-examination by Mr Tager (in connection with the meeting they had with Mr Schroff at their Cowslip Road site) whether it was normal for her to take notes, Mrs Huckle said no, although “my husband takes notes.”

55.         Mr Julian Braddock is a director of Mettron Weighing.  He confirmed that he met with Mr Ben Huckle in around March 2005 and was told that GBM was looking to expand the business into new areas which needed a weighbridge.  Although he said he could not remember after all this time the whereabouts on the reference land it was intended to install the weighbridge, he said they were in any event portable so they could be sited more or less anywhere, but they would normally go near to the office. 

56.         Mr Braddock said the order was given, a deposit paid, and the weighbridge was made.  However, for the reasons that Mr Huckle had given, the order had to be cancelled.  Because the equipment had already been manufactured, it was not possible to refund the deposit, but he told Mr Huckle that would be taken into account if and when a new order was given, and indeed Mettron had manufactured and supplied a new weighbridge to the relocation premises which was the subject of an invoice for an initial payment in June 2008.  Mr Braddock said that there would not have been a problem locating a weighbridge on a sloping site (up to 0.75m over 15m) as their manufacture can be modified accordingly and special foundations are not required. The units are relatively portable, as ground fixing is simple, and so can be moved around the site, or from site to site.

57.         Asked whether they could be powered by generators, Mr Braddock said they could, but it was not recommended as power surges when the generator is turned on and off could cause problems.   

58.         Mr Ben Huckle is Brian and Sheila Huckle’s oldest son and is also a director of GBM, now operating effectively as managing director.  His role in the Company was principally “front of house” servicing existing customers and going out and getting new business.  He referred to the growth of the brokerage side of the business, and said that a company called AMA was GBM’s largest customer.  Along with two or three other brokers, that made up a substantial proportion of the business.  Mr Huckle said that AMA had said to him it was a pity they were not in the hook-loading business, but if they ventured into that sphere, they would use GBM for it.  He said the family had been talking about it for some time prior to January 2005 when the final decision was made to move into those new business avenues.

59.         As to the rest of the business, Mr Huckle said that a significant proportion of their skip hire customers at the reference land were locally based, and there had been a large amount of passing trade because they were on a main road which also led to a B&Q.   As well as local customers, they operated in Waltham Forest, Hackney, Stratford and the general east London area.  Since the move to the relocation land passing trade had become non-existent as Scarab Close was just that – a cul-de-sac that just served a few waste transfer sites.  He said that during the time between leaving the reference land and occupying the new site, he had had to work really hard to retain his former local customers especially as, at the temporary site, they were unable to process waste and had to tip away.  That, obviously, affected profitability, but he had to hold his prices to retain customers.   Since they had settled into the new site, he accepted that they had been able to find a new tranche of customers and, since they had commenced the ro-ro and compacting side of the business, there had been a considerable increase in the amount of work through brokers.

60.         He confirmed everything that his father had set out in his witness statement, and said that he was of the view that they would undoubtedly have proceeded in 2005 if it had not been for the Olympic announcement.  

61.         Mr Huckle was asked why he cancelled the order for the weighbridge as soon as they found out in July 2005 that a move to another site would be a certainty, if, as Mr Braddock had said, it was portable.  He said that there would be a million things to do, including moving everything else that was on the site, and so cancelling an order for something that had not yet arrived meant it was one less thing to worry about especially as it was very large and would need specialist equipment to transport it.  It was, as Mr Warren pointed out, some 12 months after the move from the reference land to Scarab Close that the new weighbridge was eventually obtained and installed, and Mr Huckle was asked why, if it was so important, it had taken them that long to get it.   He responded that: “to be honest with you, we didn’t realise how profitable the weighbridge would be” and it was only after they obtained it that they came to realise the economic benefits. 

62.         Ms Jennifer Watts is managing director of her own consultancy, JMW Consultants Ltd, offering regulatory and operational support and advice to the waste management sector.  She is a legally trained professional dealing with environmental and regulatory law, is a corporate member of the Chartered Institute of Waste Management and, like Mrs Huckle, has the WAMITAB qualification.  She said she had grown up in the waste management and resource industry, working for her own family’s skip hire business where she became operations director.  Her first involvement with the claimant began in 2012 in relation to problems they had encountered with the Environmental Permit (the modern replacement for the WML) at the relocation land.  It was not until February or March 2014 that she was instructed in respect of this reference.  She accepted that she had not had any contact with the claimant in the period 2005 to 2009 and had thus not seen the land in its operational form, therefore being reliant upon the papers provided to her and the information she had gleaned from the claimant.  It was also acknowledged that, as far as the claimant’s avowed intentions were concerned, there was to her knowledge no reference in the papers she had seen to there being an expressed intent to expand the business into ro-ros and compacting.  However, she said that in her opinion there was no need for GBM to have told Arup as it made no difference to the amount of land or facilities that were required – other than the requirement to accommodate a weighbridge.  Asked whether the fact that Mr Huckle had indicated in one of the two questionnaires provided to Arup that they “may” increase the number of lorries from seven to ten, was an indication of their intention to increase their business lines, Ms Watts said that it was, and was commensurate with what the claimant’s witnesses of fact were saying.

63.         Her extensive report, dated 28 July 2014, was produced in response to the report of Mr Zimmann, and she said she had been instructed to advise whether or not she agreed with his conclusions relating to the suitability of the reference land for the implementation of the new business lines, the likelihood of obtaining planning permission and a WML for that additional business and the suitability of the relocation land for it in comparison with the reference land.

64.         In essence, Ms Watts said, the reference land was suitable for and could have accommodated the ro-ro and compactor businesses, there being adequate space for these additional activities within the constraints of the site.   However, she acknowledged that GBM had historically been operating with the additional L&C land that had to be given up in March 2005, and that following meetings with LDA at which the Huckles were present, their solicitor, Mr Morton, had confirmed they ideally wanted an area for relocation of 1.5 acres or at least somewhere between the 0.49 acre they occupied post the L&C land and the total area it had been when the L&C land was utilised.  Ms Watts said that she understood the L&C land was expected to become available to GBM again when it was finished with, but accepted that there was no written agreement to this effect, and that that had been what Mr Brian Huckle said his recollection was.  In any event, she said, she thought the extra land was needed for storage rather than the actual waste management operation, and GBM had another site to which what had been stored on the L&C land could be moved.  However, she accepted that the one of the Arup questionnaires completed following meetings and discussions said “GB Macks mentioned that their current workings are not ideal in that little time is available for separating materials for recycling due to the frequency of incoming loads.  They would ideally like to have a set up that enabled them to sort waste more efficiently.” 

65.          Ms Watts went on to say that there would have been no need to obtain a new or revised planning consent and neither would it have been necessary to apply for a new or modified WML as there was sufficient capacity within the existing one to accommodate the additional tonnage.  In 2005 the site was processing 34,600 tonnes, very considerably below the 57,200 that was permitted annually under the WML. Thus GBM would have had to increase its throughput by over 30% before any limits were reached. In 2006 43,300 tonnes was processed, and again that figure would need to be exceeded by 17%.  She said that she was relying upon the total annual capacity as that was her normal way of doing it, but accepted when it was put to her that no such limit was set out in the WML – only the daily limits, and acknowledged that there had been a number of occasions between 2003 and 2006 where the EA had expressed concerns about the fact that waste material was being stored outside the permitted area.  However, this was only by 14 tonnes (per day) and as throughputs estimated in the absence of a weighbridge were notoriously inaccurate, that amount was immaterial.    

66.         Ms Watts thought Mr Zimmann’s time-profile calculations to gauge whether the reference land could have physically coped with the expected additional throughput was “something of a red-herring”.  That type of application, as Mr Zimmann admitted, might have been appropriate for modelling new businesses, but was not appropriate, she thought, in this case. It was, she said, an extremely complex and virtually unfathomable piece of work, the methodology of which she failed to fully understand or agree. Further, his figures in respect of vehicle movements per day were wholly inconsistent with the figures that emanated from the Arup survey (113 VMPD).  However, she accepted that his calculations, which had been recast to take into account concerns expressed by her, indicated that the site could not cope with the additional throughput.  She reluctantly had to accept, in cross-examination that as Mr Bigley from the EA had told her in an email of 8 December 2014, where a WML is silent on annual tonnages, the daily or weekly allowances could have been set to prevent the piles of stored waste getting too high.   She also accepted that her arguments about there being more than enough capacity at the reference land were based upon annual rather than daily, weekly or monthly tonnages, as a comparator to what is available at the relocation land – where the permit specifies annual tonnages – as indeed most modern permits do.

67.         Whilst the relocation land offered a marginal increase in the permitted area for waste operations (agreed at 40 sq m), slight increases in the permitted tonnage and operating hours, Ms Watts said that despite all the arguments, and Mr Zimmann’s calculations, realistically GBM had been able to successfully implement the new business streams within the confines of the planning permission and waste management licence allowances that had been in place at the reference land.  In other words, at no time since GBM moved to the relocation land had it processed more than the limits that had been permitted at the reference land. Even if a revised WML had to be applied for at the reference land, she said that it would not take long as the EA had been reasonably flexible and were generally accommodating. They had discretion – this being evident from the situation at GBM’s Roebuck Road site. As the new business streams would not include any types of waste that were not already allowed for, this would be another factor in favour of an easy modification process.

68.         If a revised planning permission or a new WML were to be required for the additional business streams at the reference land, Ms Watts did not accept that because the land was in an AQMA a building would have had to be constructed for processing the waste.  She had made the inquiry of Mr Bigley of the EA, and it was her interpretation of his response that if a bespoke permit was to be provided, and considering matters on a case by case basis, permission for dealing with waste outside of a building might be allowed. There were examples of other sites where buildings had not been a prerequisite.  The permitting officer of the EA had exercised his discretion on a case by case basis subject to adequate dust suppression measures being in place.  A prime example, she said, was the claimant’s other site at Roebuck Road, which is in the London Borough of Redbridge.  There, a bespoke permit had been granted on the site which was also in an AQMA and did not have a building for processing waste.  

69.         Finally, in connection with GBM’s preferred location for the proposed installation of a weighbridge in the sloping loading dock at the reference land, Ms Watts said that whilst she had no engineering knowledge, she thought it would be useful to have it in the loading bay to save time, and to prevent overloading.  She believed that, if Mettron could not supply a unit that could be installed on a sloping site, there were other manufacturers who could provide bespoke units.  She said that she could see no particular reason, other than in connection with the new business lines, why GBM ordered the weighbridge as the EA accept estimated tonnages, and there is a set conversion factor for calculating the weights of different types of loads.  Ms Watts was of the view that there was room within the boundaries of the operational part of the reference land for up to four skip lorries to wait whilst another one was loading or unloading. However, in response to questions from me, about the increased size of hook loaders and their skips, Ms Watts referred to the plans and indicated that she thought waiting vehicles could park either in or by the workshop (on the unlicensed part of the site) or on the access lane that linked the operational and unlicensed parts of the land [recorded at pages 73-89 of the transcript – day 3; Mr Tager’s re-examination].    

70.         Mr Nedas is a chartered accountant and is the founder and principal of Jeffrey Nedas & Co which he formed in 2009.  Prior to that he was a Forensic Accounting Partner at BDO LLP, specialising in disturbance, business interruption and loss of profit claims.  In addition to the work he undertook in connection with his reports “Nedas 1” and “Nedas 2” (see paragraphs 7 & 8 above), he produced, on 1 October 2014, a rebuttal to Mr Hodgen’s report and, on 15 January 2015, a further rebuttal relating to Mr Cottage’s evidence. There was also a further short supplementary report relating to the dispute about his professional fees.  He confirmed that he had been instructed following a recommendation from Mr Huckle’s former solicitors. In preparing his first and second reports, he had been informed by Mr Hipperson’s initial work, and from information provided at meetings with the Huckles.  Mr & Mrs Huckle had also produced to him a signed personal statement outlining the Company history, its development, the affect of the CPO process and the steps they had taken in mitigation.      

71.         Mr Nedas had made certain assumptions.  Firstly that the information given by the Huckles was correct and that the new business lines would have commenced when they said they would have done (for the purposes of his reports, he took that to be the beginning of the 2007 financial year); secondly that the reference land was large enough to accommodate those proposed activities; and thirdly that the WML permitted both the existing and the proposed activities.  Each of those assumptions, he acknowledged, was for the Tribunal to decide and he accepted that he had no factual evidence concerning the claimant’s stated objectives relating to the commencement of the proposed new business lines. He confirmed that he was aware of the principles that apply in respect of the assessment of disturbance compensation, and that it was necessary to prove that the losses that were being claimed were caused by the compulsory acquisition. 

72.         His first report was not an expert witness report.  It had been prepared in connection with the formulation of the claim, but explained his methodology and reasoning in assessing the level of core business turnover, and that related to the new business streams if they had been undertaken, that would have been expected but for the CPO.  In his second report he had made some corrections and amendments to his first report, namely that rather than estimate gross profits based upon past trading history, he used the actual figures for the years 2007 to 2012 which also reflected actual changes to cost of sales and in rates of Landfill Tax.  He pointed out that the difference between the estimated and the actual figures were not great.  The revised claim, by the end of the hearing, amounted to £3,017,326 less advance payments already received. The summary of his evidence which follows is therefore based upon the methodology set out in his first report, but adopts the adjusted figures from Nedas 2.

Loss of profits – core and new business lines

 

73.         For reasons which will become obvious, I consider firstly his evidence and the post-hearing submissions relating to the figures that made up the claim of £1,284,025 for loss of actual and expected trading profit. Mr Nedas’ model produced an alleged loss of profits to the core business of £416,757, losses from the alleged failure to bring into play the new business lines of hook-loading of £218,563 and from compacting of £648,705. 

74.         In his first report, in order to formulate the ‘model’ by which the losses could be assessed, he had analysed the actual results for the years ending 31 March 2000 to 31 March 2006.  During that period, apart from a ‘glitch’ in 2005 caused by factors that distracted the Huckles from business development matters (and for which the required adjustments were made to the 2005 and 2006 accounts), turnover grew by some 35%.  In Mr Nedas’ view were it not for those extraneous factors (including a period of ill health suffered by Mrs Huckle), turnover in the following years could have been expected to increase beyond the 2006 level.  

75.         Then, to assess the expected core business turnover he analysed the Sage accounting data provided by the claimant, and extracted details of all invoices raised for the years ending 31 March 2006 to 31 March 2010 (the 2006 to 2010 accounting years). The 2006 accounting year was, he said, the last period unaffected by the CPO.   Due to the changes that were occurring in the business during the relevant years, namely the growth in broker business (one broker customer in 2006 contributing 12% to turnover to 13 in 2010 contributing 22%), it was necessary to analyse the turnover achieved, per year, between that undertaken through brokers, and that which came from its historic core business of skip hire directly to domestic and commercial customers.  In analysing the income from brokers, he also made further adjustments to exclude income from them relating to hook-loaders as this would come within the calculations of losses under the new business streams head, thus preventing the risk of double-counting.  He also analysed the broker turnover in respect of number of skips hired and prices per skip, for the 2006 and 2010 financial years.  This showed an increase in broker turnover of 108.5%, in skips hired out of 37.4% and an increase in the average rate charged for the period of 47.3% despite the Company having become more competitive on prices.  Whilst a similar exercise carried out for the standard skip hire business showed an increase in turnover of 30.4% over the same period, Mr Nedas said that figure should be treated with caution, because he understood from the claimant that when rates are increased, they are generally raised by the same increment across all the different business types.  Therefore, he said, but for the CPO they would have been able to achieve the 47.3% increase (or more) across the board.  Thus he used 47% as the key figure in his calculations. His analyses also included reference to the income from the processing of scrap metal waste. 

76.         In cross-examination Mr Nedas accepted that his in depth analysis of the broker business that created the 47% overall growth figure used in his model could not be proven in respect of the traditional skip hire business as he did not have the same level of evidence relating to that sphere.  It was purely his professional opinion that that overall figure was appropriate.  The 47%, he said, was based upon expected increases in charges, as the Huckles had assumed the number of skips hired out would remain fairly static.

77.         Turning to the alleged losses caused by the planned commencement of the hook loading and compacting sides of the business being delayed by approximately three years until 2009, Mr Nedas analysed the Sage accounting data relating to those income streams for the period since it commenced: 2009 to 2012, and cast them back to the original expected start date of April 2006.   He made adjustments to reflect the number of hook loaders that came on-stream based upon an average turnover per unit of £11,000 per month assuming that the four that actually came into use were bought in May and September 2006, April 2007 and April 2008, with a fifth, that was non income generating but used to take waste away for recycling assumed to have been bought in September 2006. He also built in expected increases in charges (including the separate charges for haulage fees and tonnages) over the period and finally deducted from the expected profits an allowance for the effects of the recession at 10%.        

78.         Mr Nedas accepted that the profitability of the Company had increased every year from 2006 to 2012 (barring a dip in 2010) and that it was not an absolute loss that was being claimed for, but the difference between what profits would have been in the absence of the CPO and what they actually were.  Some of the losses, he said, were mitigated by the increase in broker sales, but nevertheless it was GBM’s case that the established local domestic and commercial business was lost.  The answer was obvious – the turnover that would have been achieved in the absence of the CPO would have been even higher than it was, and thus it followed that profitability would be higher too.  He admitted that his figure of 47% growth in profits had been calculated on a straight-line basis, and was not the result of a detailed year by year breakdown which, he said, would have been impractical. When it was put to him that it was counter-intuitive to see a claim where the alleged losses rise the further away one gets from the dispossession date, he said “not if you take a straight-line approach based upon sound figures at the beginning and end of the period.” 

79.         Mr Nedas was then cross-examined at considerable length by Mr Warren on the precise detail of how his model had been constructed.  It was suggested that Mr Nedas had been looking at the figures “from the wrong end of the telescope” and that his model had assumed increases in profits over the period for which they were being claimed that were significantly above the generally static levels over the preceding years at the reference land.  This, Mr Nedas admitted, was entirely due to the fact that he had assumed the core business profits would increase in line with the increases enjoyed by the broker business since it had commenced, but there was no empirical evidence to support that assumption. Mr Nedas also accepted that in constructing his model, he had not taken into account, when assuming a start for the new business lines of 1 April 2007, the fact that after the move to the relocation land, GBM had not commenced the hook-loading business for another 18 months, and for the compacting business (which had generated very large profits from one customer initially) a further 18 months.

80.         In closing submissions relating to this part of Mr Nedas’ evidence, Mr Warren pointed out that the key fallacy inherent in Mr Nedas’ model is the use of the price increases in a quite different, rapidly expanding aspect of the business as a proxy for the pattern of turnover increase for the whole of the core business.  The broker business, as Mr Ben Huckle had suggested was introduced as a direct result of business lost due to the move.  But, as Mr Nedas had accepted, the price bargains struck between GBM and the brokers was dependent upon the type of business being transacted, which was very different from the volumes and prices being transacted with the direct domestic and commercial customers.   There was, it was submitted, absolutely no evidence that the core business as it stood when the reference land was acquired would or could have withstood the type of price increases achieved in the broker business.  To use that assumption to drive the whole of his model was both illogical and unsupported by evidence.   The price rises related to the broker business reflected a quite different dynamic to the traditional business during the period 2006 to 2010, and therefore the use of the 47% factor should be totally rejected.  In any event, with the business having supplanted its traditional core business with new core broker business there was no evidence of any diminution in turnover or profitability in relation to that core business that could be used to justify a hugely inflated notional turnover in the absence of the acquisition.  The 10% ‘discount’ for the effects of the recession was, it was submitted, entirely arbitrary and not backed up by evidence.

81.         That the losses claimed by Mr Nedas’ model increase significantly the further away from the possession date, despite the considerable post-move successes that the claimant has achieved, was a product of the 47% ‘straight-line’ increase assumed by Mr Nedas despite volumes being assumed to stay the same.  As Mr Hodgen had said in his evidence, the gross profit margins used by Mr Nedas for both the core and new business streams were unreliable as they are based upon the figures from what had actually been achieved from the new premises where there had also been a radical increase in recycling (not analysed out by Mr Nedas), and with the operational restrictions that clearly existed at the reference land, it could not realistically be suggested that these new successes could have been replicated there.  In any event, as Mr Hodgen had pointed out, the mitigating effect of the new business streams serves to wipe out any identifiable loss in respect of the core business.     

82.         As to the losses from the alleged failure to implement the new business streams, the key assumptions Mr Nedas made were entirely reliant upon whether GBM did in fact intend to commence this new business on the reference land and whether, if they had, it would have been feasible due to the constraints of the site. That was a matter for the Tribunal, and indeed Mr Nedas had confirmed that he did not recall being told by the Huckles that they had made a family decision in January 2005 to proceed with the new lines of business.

83.         In the light of the evidence and cross-examination, Mr Tager said in closing that the claimant “reluctantly accepted” that Mr Nedas’s ‘model’, which had been a mammoth task to construct, was imperfect.  The gross profit figures from 2007 onwards included an ever changing mix of core business, broker introduced skip business and the new business lines with their acknowledged very different gross profit margins, which Mr Nedas’ model had not successfully identified with the required degree of precision.   However, he submitted that did not mean that the Tribunal had to conclude that GBM had not, or was incapable of, proving these heads of loss.  If it was accepted that there had been a substantial loss of the core business due to the move, then the Tribunal had to do its best to assess that loss and to include a fair and reasonable amount by way of compensation.  For there to have been no loss there would have had to be a seamless transition from the reference land to the relocation land (via the temporary site during which it was effectively treading water), and that each of the lost local customers had been replaced immediately with a new one. 

84.         Accepting that a broad-brush approach was necessary, Mr  Tager said that:

“Doing the best that it can, GBM submits that by having regard to Mr Nedas Table 6.4 [Nedas 2 at para 6.14] and allowing for all the factors identified above... the Tribunal should conclude that in the four years from 2007 to 2010 there was a minimum of £750,000 of lost, core, turnover (net of substitute business from brokers), with at least a further £250,000 in the years 2011 and 2012 by which the impact of the double move will have tapered off.   In respect of this total of £1,000,000 the appropriate gross profit margin to apply is 30%, which would result in a claim under this head of £300,000.”

85.         As to the loss of the new lines of business, which but for the CPO would have been commenced by no later than the beginning of the 2007 financial year, the net impact of the double-move was to deprive GBM of approximately three years of turnover (which reflected the delay in introducing this part of the business) and profits once those new lines had become established. With the benefit of the analyses in Mr Nedas’ Tables 5.4 and 6.5 a very conservative estimate of lost turnover (for both hook-loaders and compacting) would be £500,000 pa.  Applying a gross profit margin of 35% (it being acknowledged that profits from this side of the business were higher) and allowing say £50,000 for additional costs associated with the hook loader vehicles, this produced a loss of approximately £400,000.

86.         Thus, the effect of this concession in respect of Mr Nedas’ evidence was to reduce the claim under these heads from approaching £1,300,000 to £700,000. 

New vehicle costs

87.         I turn now to the claim of £431,584 for new fleet vehicle costs as this part of the evidence is closely related to the issues discussed above.  The reason for these costs being claimable was, in Mr Nedas’ view, because the claimant’s change of policy regarding its vehicle replacement programme was a direct result of the CPO.  Whereas formerly they had replaced about one skip lorry a year with another second-hand unit, the significant increased mileage they are now required to undertake due do the distance of the relocation site from its former core business clients, and the associated increased wear and tear and maintenance costs, meant they had moved to more regular replacements, this time with new vehicles that included repair and maintenance contracts.   The costs claimed included increased annual depreciation charges (£380,295), increased finance charges (borrowing against more expensive vehicles) (£67,116), the repair and maintenance contracts (£104,226) and increased insurance premiums (£22,228).  

88.         Mr Nedas accepted that the only evidence he had relating to the alleged extra mileage was from what he had been told verbally by the Huckles.  He had subsequently been asked to remove the claim relating to the first two new vehicles that had been claimed for, as they were purchased before July 2005. Mr Nedas also acknowledged that in terms of profitability since the relocation, there was no evidence that the losses in 2009 and 2010 had not properly been compensated for by the amounts that had already been paid by GLA.  Therefore, there was no operating loss caused by the matters that were being claimed under this head.     

89.         In closing, Mr Warren pointed out that, even excluding those purchased before July 2005, some of the new vehicles had been bought well before the date that the claimant was dispossessed, and before they knew where they would be relocated to.  This did not sit well with the suggestion that new lorries were required for greater reliability over the increased miles to be covered. In fact, these more expensive vehicles were needed for the new lines of business and that was nothing to do with the CPO.  In any event, full value for money had been received. 

Relocation costs

90.         The sum shown in the final position statement of 5 February 2015 (paragraph 8 above) as being attributable to move costs according to Mr Nedas was £346,702.  The parties were at that stage some £50,000 apart and it was agreed that the reason for this was correctly summarised in paragraph 58 of Mr Warren’s closing submissions where he said:

“The difference...related to tipping away costs. It is agreed that tipping away costs [during the occupation of the temporary premises] incurred by the claimant amounted to £107,286 and it is also agreed that the claimant saved £34,257 in occupancy costs while at the temporary site.  However, while Mr Cottage deducts the latter sum from the former so that his assessment is £73,029, Mr Nedas retains the claim for £107,286 and instead adjusts downwards the claim for increased costs at the relocation premises.  This does not appear logical as both the costs and the savings were incurred at the temporary premises.  Further...the claim for increased costs at the relocation premises is not sustainable.  It is unclear why Mr Nedas includes a higher figure in relation to the second move costs than that agreed between Mr Cottage and Mr Camblin on behalf of the claimant.”   

91.          Mr Tager agreed that due to the way Mr Nedas had dealt with the figures, this additional amount would only be payable as compensation if the Tribunal decided that the claimant was entitled as a matter of principle to increased costs at the relocation premises.

 Professional fees    

92.         The sum claimed amounted to £259,648 against GLA’s figure of £199,905. The difference between the parties related to elements of Mr Nedas’ charges following the concerns set out in Mr Cottage’s supplementary report and subsequently rebutted by Mr Nedas.  In closing, Mr Warren confirmed that Mr Cottage’s concerns were no longer being pursued by the GLA, but the Tribunal was asked to bear in mind that it appeared much of Mr Nedas’s work had been unreasonable “given the weakness of the claim”, and much of it was also abortive due to changes that had occurred during the passage of the matter – for instance an earlier claim against lost profit from going into dust carts or wheelie bins no longer being pursued.  

93.         Mr Tager submitted that unless it can be shown that the claimant was unreasonable in the way it instructed Mr Nedas, or that he had been unreasonable in accepting those instructions or followed them up, then the fees he charged (and the 20% of Mr Hipperson’s fees that had been claimed) should be payable.  It was often the case that, as a forensic accountant investigates, analyses and advises upon potential claims, things will change along the way (for instance he may say that a matter that a claimant may have considered potentially claimable was, in fact, not) and he should not be penalised for that.

Costs not yet incurred

94.         This element of the claim was not pursued.

Increased costs at relocation premises

95.         This element of the claim amounted to £651,604.  Mr Nedas set out the details of his calculations for the period from October 2007 when GBM moved to the relocation land, to 31 March 2012 relating to all the costs that, in the view of the claimant, had increased solely as a result of their enforced move.  They were:

 

Rent                                                       £188,261

Rates                                                      £  77,694

Service Charge                                      £157,344

Insurance                                               £  13,063        

Light and heat                                       £    9,621

Meter charges                                        £    1,296

Water                                                     £    3,608

Repairs & Maintenance                         £       555

Advertising                                            £  18,200

Telephone & Fax                                   £    6,489                    

Various other costs                                £    7,387

Yard cleaning                                        £    6,760

Fuchs rehandler costs                            £161,326

                                                               £651,604

96.         These increased costs were those which, Mr Nedas said, had been incurred over and above the sums that would have been payable (even allowing for inflation) if GBM had remained at the reference land.  

97.         He acknowledged that he was aware of the ‘value for money principle’ in terms of compensation law, and that in connection with two graphic schedules that had been prepared by Mr Hodgen [Bundle F1 pages 1939 and 1940], in terms of the profits that had been achieved throughout the period, when set off against the compensation that had already been paid, no losses had actually been suffered.  However, he said that his claim was predicated on the basis of turnover increasing on a rising curve throughout the period in question. This was despite, as pointed out by Mr Warren, the fact that the accounts showed the turnover had plateaued by the end of the period in 2012 at around £2.4m (and indeed remained at between £2.4m and £2.5m in the two following years) whereas Mr Nedas’ model was predicting turnover of £3.2m by 2012.  Thus, the claim included loss of profits based upon turnover that was never achieved even at the new, larger, premises.  However, in answer to the question that that meant the claim must be over-inflated, Mr Nedas said it did not.  

98.         In response to a question from me, Mr Nedas said that he was not aware if some of the advertising spend that he had referred to in the claim related to new lines of business, but accepted that if it was, it would not be compensatable.  In terms of the losses that were being claimed for loss of GBM’s former local customers, Mr Nedas accepted that he had no specific details of the customers that had been lost, or figures relating to what percentage of the turnover they produced.  He said he had assessed the claim in that respect on a global basis, and acknowledged that he had no information relating to what new customers had been gained at the relocation land to replace those lost.

The case for GLA

99.         Mr David Clarke is a partner in Richard John Clarke, Chartered Surveyors of London SW1 which he founded with Richard Murphy FRICS following a career in the Valuation Office Agency.  His firm has an arrangement with the GLA where he has acted as a full time consultant.  Previously, between 2006 and 2013 he was Development Manager within the LDA and latterly GLA and is now a Senior Consultant Surveyor with Transport for London (TfL) which took over the management of claims for compensation previously undertaken by the LDA and GLA.   His particular duties have been to assist firms affected by the prospects of compulsory acquisition in relocating, to prepare briefing documents for his clients and to deal with compensation claims as and when they arise.   He, and others, have been acting in that capacity in negotiations with the claimant and their appointed advisers since April 2006, although his witness statement was specifically aimed at setting out the factual background and details of discussions with the Huckles in respect of their stated intention to move into the hook-loading and compacting lines of business.

100.     Mr Clarke referred to the letter dated 21 December 2004 which Mrs Huckle said they had not received, and which Mr Brian Huckle said he had not seen. He said that he had not been aware of the alleged non-receipt prior to the hearing, but acknowledged that the pro-forma that had been included within it had never been returned by GBM. He then set out the chain of events which followed, including the appointment in January 2005 of FSI as advisers to GBM (against which a ceiling of £15,000 in fees was agreed).  He insisted that he was not aware of FSI or any of the claimant’s other initially appointed advisers having been recommended by the LDA.  He had seen no correspondence to that effect, and whilst LDA certainly encouraged claimants to obtain professional representation, it was not the acquiring authority’s job to make specific recommendations. He was, he said, aware that there was a group of professional firms that had been “touting” for business amongst those affected by the CPO, and understood that FSI, The Balcombe Group and Chesterton, amongst others, were acting for a number of owners in the area.

101.     Mr Clarke then referred to the meeting that took place on 16 May 2006 (at which he was not present) and produced a copy of the meeting note (which had not been agreed) from which he noted that there was no recorded reference to the claimant’s allegedly intended move into the new lines of business.  The note did record that the reduced size of the Ruckholt Road site, since the L&C land had been vacated, was too small for GBM’s operations and that “ideally” a 50% larger site would be required. He acknowledged that in other discussions, GBM had said they required a site that was “slightly larger” and that that would not necessarily mean they needed something as large as what they ended up with (0.94 acre), but insisted that he had never heard any complaint that the relocation premises were too large.  Indeed, there was reference in the transcript of the CPO Inquiry to Mr Brian Huckle saying “we were very keen on it and we will be very happy to move there if the LDA apply and get the necessary planning permission for the site, and we will liaise with the EA to get our Waste Management Licence transferred.” The site to which they did move was, in fact, the smallest of the three that were at the time available in Scarab Close.  Further, there was also no reference in the transcript to the proposed new lines of business.  He said that he was aware that the relocation land had been suggested to the claimants prior to his coming on to the scene – possibly by his colleague Andrew Dunwoody, but knew that they had also looked at a number of others, some of which were too far away. He insisted that he had never received any indication from the claimant that it was not happy with the proposed relocation site.  The Huckles’ main concerns seemed to be the need for a double-move, the temporary loss of recycling facilities and the proposed lease terms – particularly it not being long enough, and the rent being more than double what they were currently paying.

102.     Following a visit to the Scarab Close site on 25 April 2006, Mr Clarke said he immediately wrote to the claimant noting that the relocation land appeared to be suitable, but that it would not be available until July 2007.  Discussions then ensued regarding the need for a temporary site into which GBM could move as the reference land was required early on in the overall acquisition process for the Olympic site.   Mr Cottage then, in May 2006, provided draft Heads of Terms for the relocation land.  Mr Clarke went on to say that from this point on he continued to work with the claimant and offered them assistance in respect of various factors associated with the moves.  He accepted that the delay in getting electricity connected to the relocation land (specifically for the weighbridge) was “not the Huckles’ fault”.

103.     Finally, Mr Clarke said that it was always expected that the claimant would make a claim for loss of profits, but that “to the best of my recollection, and having reviewed GLA’s files, neither GBM nor its advisors had ever suggested that GBM had suffered a loss due to its inability to pursue new lines of business.” 

104.     Mr Colin Cottage is a partner in Glenny LLP, Chartered Surveyors with offices covering east, north and south-east London together with Hertfordshire and Kent and, in 2011, was responsible for the formation of the Infrastructure and Regeneration Division which specialises in compulsory purchase matters throughout Glenny’s operational area.  He has been an adviser to the GLA in respect of the CPO since 2004, and became involved with the reference land in May 2005 when he met with Mr Nigel Wooding of Chesterton, who was subsequently replaced with Mr Des Camblin of Caradon Consulting. 

105.     He provided a comprehensive and helpful description of the reference land, the temporary site and the relocation land and commented (particularly in respect of entitlement under the 1961 Act) upon the elements of GBM’s claim relating to increased costs at the relocation land, one-off items of expenditure, costs not yet incurred [subsequently not pursued], the move and tipping away costs and professional fees.  As to entitlement, Mr Cottage said that the principles applied in Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111, Smith v Birmingham Corporation (1974) 29 P&CR 265, Bibby & Sons v Merseyside County Council (1977) and Service Welding Ltd v Tyne & Wear County Council (1979) 38 P&CR 352 applied in connection with the requirement to mitigate, causal connection and the fact that compensation cannot be claimed to the extent that a claimant has received value for money – for instance where he pays a higher rent but obtains greater advantages.

106.     Firstly, comparing the reference land and the relocation land, Mr Cottage said in his view they were both situated in good locations for waste transfer and skip hire businesses operating in East London and there was little distinction between them in that respect.  He said he had noted a statement on GBM’s website which read:

“Our brand new purpose built, licensed waste transfer station/recycling centre is based in East London, providing easy access to major roads, the City and the Olympic Site, cutting down on delivery and pick up times and making our rates more competitive.”

The relocation land is almost twice the size of the reference land and is a single, well proportioned site having a mainly concreted surface surrounded by wire mesh fencing, an on-site Portakabin type office, a fully compliant, purpose built high-eaves waste transfer building (which is not currently rentalised) and dedicated servicing and wash down areas.  The reference land was not concreted and was split into two main areas (separated by an electricity pylon), had its main office outside the fenced site and a shared principal access.  Noting Mr Zimmann’s comments about the reference land, and particularly its restricted nature, Mr Cottage concluded that the relocation land is more flexible, better laid out and of a superior specification.  It also has a more extensive and less restrictive Environmental Permit and all-in-all, it provided significantly better and more useable facilities.

107.     Mr Cottage did not agree with Mr Brian Huckle that “the current premises do not offer any better value than our original premises but simply cost more.” Although GBM did not need any more space than it had at the reference land, throughout Mr Cottage’s dealings with the claimant, it had always maintained that it needed a replacement facility of at least 1 acre – that having also been confirmed in an appendix to Mr Huckle’s witness statement and in the evidence that had been referred to by Mr Clarke.      

108.     Comparing the terms remaining on the lease and tenancy, and what has been provided at the relocation land (seven years from October 2007 outside the Landlord and Tenant Act 1954), but in respect of which the claimant was in discussion relating to extended terms (until 2017) it was his opinion that the market would not view the interest in the relocation land as in any way inferior to that enjoyed at the reference land.

109.     Turning to the itemised claim for increased costs, Mr Cottage split his comments into three: Category 1 – ongoing property related expenditure; Category 2 – other ongoing expenditure and Category 3 – ‘one-off items’.  As to the first category (rent, rates, service charge and premises insurance), he said Mr Nedas had simply deducted the old rent from the new and took no account whatsoever of the greater size of the relocation premises, or the additional advantages it provides to GBM.  There was no consideration under this or any of the other heads of claim, of the value for money principle.  The new rent was agreed between himself and Mr Camblin in 2007 and equated to an average of £1.90 psf and was for the land only – the buildings had effectively been provided ‘rent-free.’  There had been no suggestion that the agreed figure was anything less than open market value, and Mr Huckle’s suggestion that they did not need all of the land belied the fact that it is all being used for the purposes of the claimant’s business.  The new site has served to facilitate the implementation of the claimant’s new business stream, whereas, as Mr Zimmann had said, they would have struggled at the reference land.  

110.     As to increased rates, the figures reflect the larger site, and it is notable that the claimant has never submitted an appeal against the assessments in either the 2005 or 2010 rating list.  Whilst it was acknowledged that there was no service charge liability in respect of the reference land, the fact remained that the claimant has never yet paid any in respect of the relocation land.  They signed up to a lease that included a liability for the maintenance and repair of the estate road, and if such invoices are raised in the future, GBM will be receiving the benefit of the works that those charges cover.  Similarly, the new lease requires the tenant to take out insurance (whereas the old one had no such provision), and GBM has the benefit of the cover under that policy.     

111.     As to Category 2 costs, Mr Cottage said they would be covered in Mr Hodgen’s evidence.  Turning to Category 3, as set out in Mr Nedas’ report, these included matters such as light and heat, water, ‘various’ other costs, repairs and maintenance, advertising, telephone and fax.  Some of the items claimed for appear to be for expenditure that has not been incurred as a direct consequences of the CPO, others such as the hire of an electricity meter and generator (before the main electricity was connected) are standard items which all occupiers will have to pay and again cannot be said to be related to the CPO.  Other items, which may qualify for compensation remain unproven, and again therefore it was his opinion that no compensation is payable for any of the items claimed for.  

112.     On the question of move costs, Mr Cottage set out the position as it was at the time he prepared his report – January 2014.  He pointed out that costs under this head had been agreed by himself and Mr Camblin in April 2009 at £237,950 (excluding tipping away costs), but according to Mr Nedas, it appeared that the claimant was now distancing itself from that in now claiming £346,000.  However, as set out in paragraphs 90 and 91 above the situation has moved on and I do not, therefore, deal with it further here.   

113.     Mr Cottage also covered the question of professional fees, which in the light of what I have said at paragraph 92 above, I take no further at this point. Claimant’s time was not pursued.

114.     On the question of the value for money principle, which was the crucial element of Mr Cottage’s evidence on increased costs, Mr Tager referred to the analogy he had mentioned in opening of someone moving from a 3-bed house with a rental value of £500 per month to a 5 bed one at £1,000 per month, both of those rents being at market rates.  He asked whether, in the eyes of a valuer, you would be getting value for money.

115.     In a lengthy, but in my view, helpful reply, Mr Cottage said:

I’m afraid that [again] you are putting slightly the wrong spin on it.  There are two aspects.  The first point is value for money is assumed to exist.  The default position with any compensation case is that the claimant receives value for money in the property he is acquiring.  The only way you move from that default position is if evidence is produced to say that value for money hasn’t been earned. In this particular case, no evidence whatsoever has been put forward to suggest that there has not been value for money.  Therefore the default position exists...and therefore the value for money principle applies.

The second point is that even if you were correct, there are two ways in which you can, in my view, argue that there should not be a presumption of value for money.  If the rent being paid is too high – and there is absolutely no evidence that that is the case here.  The second is if the claimant is for some reason forced to take premises that are larger than required.  Again, there is no evidence that that is the case here.  All the evidence shows, in my view, is that the size of the site was reached with discussion with the claimant. In fact, I took part in those discussions and I can confirm from my own knowledge and experience that the claimant was looking for a larger site [than it actually got] ... but after a period of debate it was accepted that an area of [around an acre] was sufficient.”

116.     He went on to say that, using Mr Tager’s analogy, it would be like the house-owner saying “this one is not big enough – I want a larger one” but, after having acquired it, going back to the compensating authority and saying “I didn’t really want one that big, so I want to claim compensation for the extra it’s costing me to occupy it.”   In this case the Huckles’ had control of the site they required.

117.     Mr Cottage was then asked why an earlier offer of £31,000 he had made for the replacement of the trommel (which could not economically be moved from the old to the new sites) was withdrawn.  He said that, as it had transpired, the claimant did not buy a new trommel, but sold the old one for £500 so it had obtained value for money.  GBM did in fact eventually hire one (for a period of time only) and there must therefore be a question as to whether or not it was essential for the business.   

118.     Mr Rainer Zimmann is an Associate Director of Arup and is currently their Regional Business Leader for Resource and Waste Management in the UK, Middle East and Africa.  He is a Chartered Engineer, Chartered Waste, Water and Environmental Manager and is also a mechanical engineer.   He was instructed in connection with this reference by GLA in October 2013 but confirmed that he had inspected the reference land twice in 2006, whilst it was still operational, as part of GLA’s appointed team dealing with the relocation of businesses. At that time, and until 2009, he was involved in the relocation of eight waste management businesses including Bywaters who occupied the site adjacent to the reference land (where he acted as project manager). He acted as project director in respect of five other waste management business (including the claimant) and was responsible for the overall delivery of the multi-disciplinary planning and engineering services, including the obtaining of the required planning permissions and Environmental Permits.  He said that what he saw at the reference land was much the same as had been demonstrated on the video that had been provided by the claimant.  He had also inspected the temporary site and the relocation land in 2014.  

119.     Mr Zimmann said he was instructed in his capacity as a waste management expert to consider whether the reference land was suitable for the implementation of the new business streams that the claimant had said it intended to undertake, whether planning permission and a revised WML would have been likely to be forthcoming, and on the suitability of the relocation land for that type of business. 

120.     He explained that he had issued a questionnaire to GBM on 28 June 2006 the purpose of which, as explained in the covering letter, was to advise them that a workshop was to be arranged to “...discuss and to determine your business needs for the proposed Thames Wharf site...”  Whilst the questionnaire primarily referred to the Company’s existing operations, it also included specific reference to the prediction of future waste streams (types and tonnages).  No reference was made in the completed questionnaire to the claimant’s allegedly planned new business streams, and he said he did not recall GBM ever mentioning it at the workshop held on 27 July 2006, or in subsequent meetings or correspondence.  He said that his team had been told by Mr Camblin, on 27 May 2007, of GBM’s intention to install a weighbridge at the relocation land and had requested that a wider entrance gateway be provided to facilitate access.  Mr Camblin’s email stated that the decision on the weighbridge was recent, and apologised for the lateness of the request.

121.     Following discussions with the Environment Agency regarding the four waste transfer businesses that were to be relocated to Thames Wharf, it became clear that there would need to be a fundamental change in GBM’s former working practice in that a new purpose built three sided building would have to be provided to cover the licensed waste handling area.  Full planning applications were made, and permissions were granted for 5 years (subsequently renewed) on 4 January 2007.  Similarly, the new Environmental Permit for the relocation land was obtained by Arup on GBM’s behalf (Ref No: EAWML80780) on 11 June 2007.

122.     Mr Zimmann set out the detail of his investigations, and included a Time Profile User Data model (which, in his rebuttal report he had significantly amended to take into account concerns raised by Ms Watts) to provide support for his conclusions on the questions he had been asked to consider.  He said that in his opinion, the reference land would not have been suitable for the implementation of the claimant’s proposed new business activities (larger containers delivered and collected by hook-loaders) without increasing the area available for waste processing, and without obtaining a modified WML.

123.     As his inspection (and the video) had confirmed, the licensed waste processing area was generally congested, and manoeuvring of mobile plant and operatives was constrained, meaning that with all plant having to move slowly, the segregation of waste was inefficient.  Indeed, GBM had acknowledged that there was insufficient space and time to recover more recyclables.  Thus the proposed increases in revenue streams from more recycling would have been difficult if not impossible to achieve.  Whilst he accepted that the installation of a weighbridge might just about be achievable, whatever location it was in would have severely constrained the amount of available space for sorting and loading, making operations even less efficient. If it was to go in the loading dock, significant modification of the dock would have been required as it had been constructed as a steeply sloping ‘pit’.

124.     There was evidence of some waste storage outside the licensed area (as reported by the Environment Agency in documentation from its regular compliance visits), and processed waste from the trommel was also deposited onto the ground outside the area. He explained that when he visited the site, lorries reversed in through the entrance gated and deposited their loads between the entrance and the loading dock.  This served to effectively block the entrance until one of the site vehicles came to push it away.  Thus, the waste was not being initially deposited in the allocated waste storage areas.  He accepted that 2006, when he visited, had been an exceptional year in terms of throughput, but the returns had expressed concerns about waste spilling out over a long period, and so it stands to reason that the additional business lines would have exacerbated that.  

125.     Mr Zimmann said the EA reports also showed a number of additional areas for concern.  His time profile spreadsheet, constructed using the Company’s own vehicle movement data and reported load rates showed that there was no further capacity within the WML limits to accept more waste.  Any increase in loads would have either breached the daily tonnage allowance or the licensed working hours’ constraint, or both.  His model, he said contained a number of sensitivity checks.  Not only was there insufficient space for the adoption of the new business streams, but the area for manoeuvring mobile plant and working space for operatives was already severely limited and possibly dangerous.

126.     Mr Zimmann thought that a new planning consent would also be required because more land would be needed.  Although he thought that there could also be problems with increased traffic generation, he accepted that they might just about be able to get away with it.  Any extra land would, of course, have had to be obtained with the resultant significant investment of money and time.  Modification of the WML would also have been required, given the daily limits for waste handling, transport (vehicle movements) and storage.  Whilst it might have been obtainable, in time, undoubtedly the EA would require operational improvements, possibly including a new building over the operational area (as had been a requirement at the relocation land).

127.     There was also the lead-in time for obtaining planning permission, a revised WML and undertaking any necessary site upgrading works (probably to include construction of a new building) – up to two years in total, and none of these delays or the associated significant costs had been factored in by Mr Nedas in his assessment of lost profits from April 2007.

128.     It was Mr Zimmann’s opinion that GBM’s move to the relocation land has enabled the implementation of the new business streams because of the increased licensed recycling area, a more convenient and usable site layout, extended working hours and no stated daily limits for waste handling, transport and storage.

129.     Mr Zimmann said that he did not agree with Mr Brian Huckle’s suggestion that a weighbridge was essential for the new lines of business.  Many other firms (up to 70 or 80% in his experience) who operate hook-loading and compacting businesses do not charge by weight even though they have weighbridges - they continue to adopt the procedure that GBM had historically used.  Whilst he accepted that many clients prefer to be charged by weight and it was probably more profitable to the Company, it was by no means essential.  No mention of the need for a weighbridge at the relocation land was made in the reply to the 2006 questionnaire, and the claimant had indicated that it would be happy to share one at the Thames Wharf site.  It was only at the last minute that Mr Camblin had mentioned that GBM had decided to install a weighbridge.  Nevertheless, he accepted that virtually all the other waste transfer businesses with which he had dealings had weighbridges, and he thought it was a better way of monitoring throughput and performance.  There were therefore good reasons for the Huckles to have ordered a weighbridge for the reference land, but it need not have been related solely to new lines of business. However, when pushed on the question of GBM’s motives in ordering the weighbridge, he accepted that there was perhaps a 50/50 chance that it could have been in connection with the stated proposals.

130.     Mr Zimmann also set out in detail the revisions he had made to his time profile model following Ms Watts’ criticisms of his first version, and conclude that despite allowing for one further hour a day operative working time, and having re-assessed GBM’s waste return data, the fact remained that they had exceeded their daily tonnage allowances by an average of 14 tonnes per day throughout the year.   Asked about the capacities set out in Table 1 of Ms Watts’ report which indicated that in addition to the core business it was undertaking, there may have been the capacity for up to another 75 tonnes per day of new ro-ro business, Mr Zimmann was adamant that any additional tonnage could only have been achieved on the assumption that there was no daily limit.  Furthermore, as he had said many times in his evidence “absolute chaos” would break out due to the severe handling constraints of the site.  His spreadsheet, he said, was an empirical model that was based upon GBM’s actual throughputs and those of other similar businesses, and Mr Zimmann said that he stood by it.  His inputs accorded quite closely with Ms Watts’ own figures. 

131.     Finally Mr Zimmann had provided a technical note regarding the claim for the hire of a Fuchs Re-handler at the relocation premises on the grounds that the tracked excavator used for loading vehicles at the reference land was unsuitable.  Whilst he said that that the re-handler used on the top of the pile of waste at the reference land could have been utilised within the building as in his view the roof height was sufficient to accommodate the lifting height of the arm, it was not ideal.  This was because working in a building with a level floor where the lorry being loaded is at that level was different from the process adopted at the reference land where the vehicle backed into a pit that was one to one and a half metres below floor level.  So, working the re-handler from the top of pile of waste meant the driver in its fixed cab could easily see into the lorry’s bin. At the relocation premises the Fuchs Rehandler that was hired at £36,050 pa had wheels rather than tracks and a similar length lifting arm but a cab that raised up so that, even working from the ground, the driver could see into the container being filled.  It was designed for working from ground level and whilst he was of the view that the tracks on their existing excavator would not have caused much damage to the concrete floor in and outside the building, he would have gone for such a system himself and.  The claimant had eventually purchased a new wheeled Liebherr re-handler with lifting cab but this was acquired after the end of the 2012 financial year and did not form part of the claim.

132.     Mr Gordon Hodgen is a Chartered Accountant and a partner in the London office of HSNO, an international forensic accounting firm.  He specialises in the valuation of businesses in connection with business interruption claims, compensation claims resulting from compulsory purchase orders and loss of profits arising from fraud and contract disputes.  He had been asked to review Mr Nedas’ reports, consider what information may have been lacking in order for a proper evaluation of the claim to be made and to provide his advice and opinion on the loss of opportunity and loss of profit elements of the claim.  He was also asked to provide a valuation of the business in a “no-scheme world” scenario as a sense check against the overall value of the claims.

133.     In the light of what is set out in paragraphs 83 to 86 above, it is not necessary for me to set out in any great detail the exercise that Mr Hodgen undertook, other than to summarise his conclusions which, indeed, support the reasoning for the claimant’s concession that Mr Nedas’ report was ‘imperfect’ for the purposes for which it was prepared.  In his first report, which responded to ‘Nedas 1’ (the claim valuation), Mr Hodgen pointed out that Mr Nedas had presumed, in his calculation of the claim, that there had been no demand constraints from customers, that there were no capacity constraints at the reference land, there was no recognition of possible betterment from the new site and the new fleet of vehicles, and there had been no attempts to test the likelihood of the claimed growth actually occurring.  There was also no documentary evidence that it was the claimant’s actual intention to pursue the new lines of business when it said it was.  Further, when considering the actual value of the business based upon an analysis of the net profits from 2002, and applying a reasonable multiplier, even allowing a highly speculative value of £133,000 for the new business potential, the value of the business was only £529,000.  This, he said, proves beyond peradventure just how over-inflated the claim appeared to be.

134.     In his rebuttal of ‘Nedas 2’ Mr Hodgen said that the claim for the alleged core business losses was entirely misconceived because it presumed a continuous level of growth in turnover and gross profits that was markedly in excess of the improvements that were actually achieved.  In his view the relocation had very little impact upon historic customer demand.  Mr Nedas had relied, to a large extent, on an analysis of the annual credit card turnover in arriving at his conclusion but Mr Hodgen pointed out, and explained further in examination in chief, whilst the records for the period 2002 to 2004 related to individual credit card payments of less than £300, the way GBM recorded them in later years changed to a daily rather than individual total. Thus what appeared to be a substantial decline in sub-£300 transactions was nothing of the sort.  The daily figures would, of course, have been well over £300 because they were cumulative results. In reality, gross profit from the core business increased from £292,633 in 2006 to £634,264 in 2011.  Mr Hodgen said (in his third report) that despite it being likely that relocation will result in the loss of some immediately local business, from an analysis of the sales ledger from 2006 to 2012 which set out the results for each of the claimant’s named customers, it could be concluded that apart from two new customers, none of them could be considered significantly more local to the reference land than to the relocation land.  One of the new customers, LB Newham, was producing a large amount of income, and they did not appear on the records relating to customers at the reference land.  They were therefore a new customer, local to the new site.

135.     Regarding broker business, turnover in 2006 was £139,332 and in 2011 was £413,377 despite it being accepted that it was a lower margin business than the core business.  In the light of all the information, and the factual evidence from the accounts, Mr Hodgen said that it could not reasonably be concluded that there had been any loss of profits.     

136.     As to the argument that the proposed new business streams could or would have been commenced on the reference land, Mr Hodgen said that in the light of Mr Zimmann’s conclusions, he had not attempted to calculate any loss under that head.  Regarding the claim for additional expenditure, Mr Hodgen said that whilst he accepted some costs had increased, most notably rent and rates, profitability had improved to such an extent that it could only have been achieved incurring such additional costs.  In other words, as Mr Cottage had explained, the ‘value for money’ principle applied.  In connection with the move to new rather than second hand vehicles, Mr Hodgen said that it had been shown that GBM had adopted that policy before it knew of the proposed move, and so that could not be seen to have been caused by the CPO.

137.     Finally, loss of profits, this had been assessed by the GLA at £91,101 in respect of loss of profits during GBM’s occupation of the temporary premises, but was not specifically spoken to by either Mr Hodgen or Mr Nedas.

Discussion  

138.     It seems to me to be appropriate to deal with the individual components of the claim on an item by item basis, as set out at paragraph 8 above. 

Loss of profits:  £1,284,025

139.     The first of the three component parts of the loss of profits claim, amounting to some £416,757, concerned the alleged loss of core skip-hire business.  I entirely accept the criticisms that were made of Mr Nedas’ ‘model’ by which he had assessed this element on the basis of a straight line increase in turnover across the board of 47%, despite that figure only having been achieved on what in the early stages was a relatively minor element of the business – brokers.  The lesser increase in the core business (at around 30% for the period) was put down to the CPO but, as far as I can see, there was absolutely no justification for this. Also, in answer to questions from me, Mr Nedas admitted that he had been unable to establish precisely how much local or passing trade had been lost as “there were no figures for individual accounts, but I had to do it on a global basis” and that he had no information as to what business had been gained at the relocation land.  In my judgment, Mr Tager was absolutely right to concede that the model was imperfect, but in an attempt to persuade me that at least some of the claim was justified, he said that a broad-brush approach was needed and that “doing the best that it can”, GBM submitted the Tribunal should find £1,000,000 of lost turnover which at 30% gross profit, amounted to a loss of £300,000.  He said I could only determine that there was no loss if there had been a totally seamless change to the new site and with every customer lost from Ruckholt Road being immediately replaced by a new one at Scarab Close.  However, as I have said above, that was not an exercise that Mr Nedas was able to carry out, and I have no evidence therefore to go on.   I do not accept that the rejection of one flawed approach justifies the adoption of another, and it is for the claimant to prove its loss.

140.     Whilst I do not dispute that the figure of 30% gross profit was supported by the evidence from GBM’s accounts, there was absolutely no justification given for the turnover figure that was mooted.  Indeed, as pointed out by Mr Hodgen and by Mr Warren in submissions, the claimant has enjoyed considerable success and has not suffered an accounting loss of any description throughout the period in question.  On the contrary, profits have increased by substantial amounts following the acquisition, before reaching in 2010 figures virtually double the 2004/05 profits, before plateauing at that sort of level.  Most of the increased profits have come from the broker business and, undoubtedly the new lines of business but there is no indication at all of the core business suffering.  In that regard, I take into account the exercise that Mr Hodgen undertook in respect of the core business analysis and note also his criticisms of Mr Nedas’ exercise concerning the credit card payment records.      

141.     All in all, I find this element of the claim totally unproven, apart from the GLA’s figure of £91,021 relating to the losses occasioned during the temporary occupation of the interim site (upon which I heard no evidence from the claimant) , and I determine therefore that that should be the figure to be applied.

142.     Turning now to the losses alleged to have occurred as a result of GBM being unable to start its new lines of business of hook loading and compacting in late 2005 early 2006, or at the latest April 2007 (there were conflicting statements on the precise start date, but April 2007 was used by Mr Nedas), these amounting to £867,268.  There are two issues. Firstly, whether the claimant did actually intend to commence this extension to its business at that time and was prevented from doing so by the CPO and, secondly, even if it did, whether or not it would have been practicable or permissible on the reference land.  I consider the second issue first, in relation to which I have the advantage of having viewed the video evidence submitted by the claimant.

143.     In summary, I prefer Mr Zimmann’s evidence which I found to be cogent, well researched and entirely persuasive.  He was clearly knowledgeable and well versed in waste management matters, and had been closely involved with the relocation of a large number of waste management operations in connection with this scheme, including the claimant’s move.  He had seen the site in operation whereas Ms Watts had not. I agree with his view that the working area was significantly congested and constrained at the reference land (this being supported in the video evidence), and that the claimant’s working practices would have had to be very substantially modified if there was any chance of it coping with even a limited increase in tonnages, let alone the level of increases that would have brought about the extent of profits that were being claimed for. 

144.     On the question of tonnages, I think that Ms Watts’ insistence that even now, at the larger relocation land, GBM was still not exceeding the annual tonnages that were permitted at the reference land (albeit that not being specifically laid down – it was simply a multiplication of the permitted daily tonnages) was far from relevant.   It was clear to me from viewing the video evidence that the permitted working area was indeed extremely constrained and with the piles of waste located on each side of the “pit” into which the collection vehicles reverse, and the short distance between the pit and the entrance gates on to the main access that was shared with Bywaters, there could only possibly have been room for one, and not two or three waiting skip lorries to be accommodated on that site, as Ms Watts indicated there was.  Even that one would only be able to wait in front of the vehicle that was being loaded, and it would have to pull out into the access way to allow the other vehicle to leave.  With the relocation land, there are separate in/out accesses, and ample space for additional incoming vehicles to wait whilst others are being processed. 

145.     Then there is the question of the daily tonnages and the fact that the EA had noted, on no less than 14 occasions between 2003 and 2006 that waste was spilling out beyond the permitted processing areas.  Whether or not that was something over which the EA might take action, or whether, as Ms Watts suggested, it was a matter between landlord and tenant, does not in my view matter.  If the failure to comply with the constraints of the WML occurred with the tonnages that were, according to GBM’s returns, actually being processed (34,600 tonnes in 2005 and 43,000 tonnes in 2006) then it seems to me that there was little if any chance of the sort of tonnages that are now permitted under the Environmental Permit at the relocation land (which does not apply the same daily restrictions) could ever be achieved at the reference land. I am persuaded by the calculations provided in Mr Zimmann’s supplementary report, which he had helpfully recast to take into account concerns raised by Ms Watts, that the reference land could not realistically have coped with the increased tonnages and vehicle movements without seriously exceeding the daily allowances and creating rather more severe over-capacity problems than those that had been regularly reported on by the EA.

146.     Section 4.2.2 of the WML also stipulated a limit on the amount of putrescible waste that could be stored on the site and Mr Zimmann pointed out that there was one occasion (in 2003) when the EA reported that the waste storage capacity of 130 cubic metres was exceeded, although, it did not, as Ms Watts pointed out, specify by how much.  Nevertheless, the calculations he had performed (his appendix RMZ14) confirmed that, in his view, in excess of 800 tonnes was stored on the land.  This provides further support for the views I have expressed above.  

147.     I do note that Ms Watts pointed to a number of EA reports that had given positive reviews about the site, and that she thought at least some of the storage on site that had been processed through the trommel may not have been considered waste and may have come within the exemption set out in paragraph 1 of the Waste Management Licensing Regulations 1994. However, what I have to do is determine whether there was a realistic prospect of GBM being able to commence its new lines of business (whether or not there had been any serious intention to do so in 2005) on the reference land.  On the basis of the evidence before me, I conclude that that would not have been a realistic prospect.

148.     Even if I were to be wrong in taking this view, and the Huckles (who I accept were experienced operators) could have extended into the ro-ro and compactor business at the reference land, I am of the view that it could well have been necessary for a new planning consent to have been applied for and obtained particularly as the reference land was within an AQMA, and the claimant might have had to install a building of similar type to that provided by the GLA at the relocation land.  Similarly, it would in my view have undoubtedly been necessary to obtain a revised WML – particularly in regard to the daily tonnage restrictions.   All of this would have taken time and not insignificant expense, and none of this was taken into account by Mr Nedas in his assessment of the alleged loss of profits.   I do however accept Ms Watts evidence regarding her discussions with the EA, in that there might have been flexibility, but there was no evidence that potential need for a revised planning consent and WML had even been considered by the claimant.  

149.     Turning now to the claimant’s avowed intentions, I do not, I think, need to make a specific determination on this issue which is very much “our word against theirs”.  Whether or not they did plan to start, as Mr Brian Huckle said, in late 2005 (or perhaps early 2006) I am very surprised that if the weighbridge was such an important requirement for the establishment of GBM’s new business lines, it took them such a long time to install one at the relocation premises, even though mains electricity was not initially available.  It could have been hooked up to the generator that was provided in the interim (its existence being visible in one of the site photographs produced in evidence), even though that was not an ideal arrangement.  In any event, it transpired from cross-examination of Mr Brian Huckle and from the evidence of the waste experts that a weighbridge was not absolutely essential as the tonnages could be (and historically were) estimated, and there was also the option of fixed prices for the large containers and compactors.

150.     Whilst Mr Zimmann accepted that it would have been physically possible to locate a weighbridge immediately inside the entrance gates (in front of the loading dock), in my view it would probably have been impractical to do so for two reasons.  If it were to be the type currently in use at the relocation land (which sits on the ground rather than being sunk in so that it is level with the ground), that was a turning area where the skips come in, do a 3-point turn and reverse up to the tipping zones.  It does not seem to me that there would be room for the vehicles to cross it and then turn without encroaching onto the steeply sloping loading dock, especially if the dock was occupied.  Secondly, if it were to be a sunken unit, I note from the site plan [file F1 p. 1643] that there is a drain run and a manhole right inside the entrance gates, and although no evidence was produced on this aspect, I think this would have created a problem.

151.     I am also not convinced by Ms Watts’ suggestion that it could have gone into the loading dock. Even if it could have physically been installed on such a sloping section of the site, that location would have created considerable difficulty weighing incoming loads.  Finally, on this topic, I do wonder if there really was the opportunity for a weighbridge to be located outside the entrance gates as this was a shared access which was in part obstructed by the yard staff hut and the main office.   

152.      In conclusion therefore, even if I was satisfied that the GBM’s intentions really were as they were stated to be, the site was not capable of dealing with the new lines of business.  Indeed, there was clear evidence that the Huckles’ accepted that the 0.49 acre licensed area was tight and that they were struggling to cope with what they had.  Mr Brian Huckle did say that in an ideal world they would have liked 1.5 acres, but in reality they really did need more than they had, and that they were very happy with the 0.94 acres that was provided. That the new site is suitable for their extended business is clearly demonstrated by the success they have had in increasing profitability by a very substantial margin. 

153.      Mr Tager similarly accepted in closing that Mr Nedas model could not be relied upon, but said that on the basis of his tables 5.4 and 6.5 lost turnover from ro-ros and compacting could be assessed at £500,000 pa for each of the three years it was alleged the introduction of the new business had been delayed which, at 35% profit, amounted to a gross profit lost of £450,000.  From this, about £15,000 pa should be deducted for increased operating costs (new vehicles) leaving a rounded £400,000 as justified.

154.     It will be clear from my conclusions above that I am not persuaded by this element of the claim.  The site simply could not have coped with anything more than a very limited increase in tonnages, and even to do that GBM would have had to amend its working practices.  It was accepted that Mr Nedas’ model was imperfect, and Mr Tager’s revised ‘calculation’ of the loss was based upon nothing more than conjecture.   In my judgment a loss of any description under this head remains unproven, and compensation is thus determined at nil.  Although I have said above that claimant’s intentions are not critical to the determination, I would say here that the only actual evidence that was produced in support of the claimant’s account of its subjective intentions (there being no business plans or written records of such intentions) that might have persuaded me to find in their favour was the ordering of the weighbridge.  However, as will be seen from what I have said, not only was it not essential for the commencement of the new business lines, but in any event it was two years before one was installed at the relocation land.  Therefore, that evidence of itself is unpersuasive, and provides no support for the claimant’s case.            

Increased operating costs

155.     This aspect of the claim can be dealt with extremely shortly, particularly in the light of Mr Nedas’ concession [paragraph 97 above] that in terms of the profits that had been achieved, no losses had been suffered, and that the losses that had been calculated on the basis of a predicted rising curve which showed turnover at the end of the period some 28% higher than had actually been achieved in reality.  I found Mr Cottage’s evidence relating to this element of the claim well considered and helpful, and I accept it all but for two items (see below).  I am therefore satisfied that in respect of all but one the items listed under this head, the claimant has received value for money. As the GLA said in closing “what was on any reading of the evidence a highly constrained and sub-optimal operation at the reference land was replaced with a much larger, purpose built set of premises without operational constraints.”

156.     The rent for the relocation premises (which was accepted by the claimant) reflects the fact that it is a site approximately twice as large as the reference land, and is unarguably more suitable and more readily useable (as accepted by the Huckles).  Indeed the whole of the site, as they admitted, is being used in connection with the business.

157.     Whilst the site might be less visible to passing traffic, I have not seen any evidence to suggest that much if any business was ever obtained by potential customers driving past the reference land.  Although no specific valuation evidence was produced to confirm or deny whether the £1.90 per sq ft initial rent was a market rent, no suggestion has been made that it was anything but.  As to rates, they again reflect the premises as they are and, as submitted, no appeal has been lodged. I have also not forgotten that the claimant has been getting the additional value created by the waste transfer building effectively for free.  The other significant claim under this head was for service charges which have not been paid and are not therefore recoverable as compensation. Any future liability will be in respect of services from which the claimant will derive benefits.

158.      As to the claim for the hire of the Fuchs Re-handler, amounting to £161,326 whilst it was clear from the evidence and Mr Zimmann’s technical note that the claimant’s tracked, fixed-cab excavator could have been re-utilised within the building at the relocation land, I accept that would not have been ideal due to the different working arrangements within a building.  Mr Zimmann accepted that the Fuchs Re-handler would be operationally safer in those circumstances, and indeed said that was what he would have done in the circumstances.    In the light of evidence on this, I am satisfied that the need to replace the re-handler was directly caused by the relocation.  However, and doing the best that I can to take account of the fact that the old excavator could have been used, and the claimant will have obtained value for money from the Fuchs equipment, I consider that payment of 50% of the costs incurred in hiring it would amount to fair compensation, and thus determine that head at £80,663.  

159.     Finally, under this head, I am of the view that, as is normal in circumstances such as this, compensation should be payable for additional advertising but, again, I note that a significant proportion of the claimed £18,200 was not incurred until some two years after the move.  Again, doing the best that I can, I allow approximately 50% of this - £9,000.

Relocation costs 

160.     In the light of my conclusions above, and what Mr Tager said [paragraphs 90 - 91], I conclude that the additional £52,378 claimed by Mr Nedas is not payable, and compensation under that head remains as calculated by the GLA at £294,324.

Professional fees

161.     I note that the concerns expressed by Mr Cottage in his rebuttal report on fees are not being pursued by the GLA (paragraph 66 of Mr Warren’s closing submissions), although it was suggested that due to certain ‘weaknesses’ in Mr Nedas’ evidence including an element of abortive work, some of the fees claimed by him were not properly incurred. It was also suggested that no invoices relating to other pre-reference fees (including those of Mr Hipperson) had been provided to the acquiring authority and it was not possible to verify whether or not they were properly incurred. 

162.     However, Mr Nedas actually reviewed his own claim of £199,423 and acknowledged that some of the fees related to post reference matters.  The claim was thus reduced by £68,725 and amended to £130,697, confirmation of that having been provided to the GLA on 27 November 2014.  As to the suggestion that some of Mr Nedas’ pre-reference fees might have related to abortive work, and should thus be disallowed, I accept Mr Tager’s arguments that, particularly in respect of forensic accounting work, there will always be matters which change or for a number of reasons might not be pursued, but the investigation works still need to be undertaken.  It was also submitted for the claimant that Mr Nedas had verified all of the reports that were before the Tribunal, and those reports included all the relevant evidence relating to the pre-reference fees claimed.  He had stated that it was his view that 100% of those fees were justified except in respect of Mr Hipperson where it was considered that 20% of his claimed fees should be allowed. The reasons for this were explained, but Mr Nedas was not cross-examined or challenged either at the hearing or, other than generally as referred to above, in closing.

163.     I accept the claimant’s arguments in regard to fees, and allow them in the total sum of £190,923 which is the originally claimed £259,648 less Mr Nedas’ fees adjustment of £68,725.

New fleet vehicle costs

164.     The claimant’s principal argument on this issue was that it took the decision to purchase new rather than second-hand vehicles because of the higher mileages and longer journey times that would ensue from the move to premises that were between four and six miles further away from the Company’s former base.  This, despite there being numerous other good reasons for acquiring new vehicles, including the fact that the ‘deal’ with Mercedes Benz came with servicing and maintenance contracts. I find that the decision to move to brand new vehicles was taken long before the move, and I fully accept the GLA’s submissions that with it having been taken before the relocation site was even known, any suggested causal effect of the CPO is unfounded.  I have to say, I find it incredible that this head of costs was ever even pursued.  There was no evidence to prove that the claimant’s customer base following the move created additional mileages or increased wear and tear.  The claimant will also have received value for money.  Compensation under this head is therefore nil.

Occupiers Loss Payment

165.     This is agreed at £4,993.

Costs not yet incurred

166.     Not pursued.

Summary

167.     This determines the issues that were before me.  Compensation is determined in the total sum of £671,004 made up as follows:

Lost trading profit                                                         £   91,101

Relocation costs                                                            £ 294,324

Professional fees                                                            £ 190,923

Costs not yet incurred                                                   £ Nil

Increased operating costs                                              £  89,663

New fleet vehicle costs                                                 £ Nil

Occupier’s Loss Payment                                              £   4,993

Total                                                                              £671,004

 

168.     From this sum will have to be deducted the advance payments already made in the sum of £387,304. As I have said, the question of fees paid directly to the claimant’s advisers was not a matter before me and therefore does not form part of the above calculation.

169.     The parties are now invited to make submissions on costs, and a letter setting out the procedure for so doing accompanies this decision.  A determination on costs will form an addendum to this decision.

                                                DATED 18 May 2015           

                                                           

 

                                                P R Francis FRICS