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Part B

Compulsory Purchase Claim for Jennifer's Shop: A Constructed Valuation and Assessment

In the given vignette of Jennifer's shop stumbling upon compulsory acquisition by Casterbridge City Council (CCC) for the sake of a new road plan, it is imperative to diligently scrutinize and come up with diverse heads of claim for compensation for Jennifer, taking the notion of legal provision as well as specific circumstances into consideration, which are hereby mentioned below:

Market Value of the Property

The first course of action that Jennifer should concentrate upon is to claim the compensation associated with market value of the shop to put it in simple perspective it can be stated that since Jennifer's shop is located in the central business district with an 8-metre frontage and a depth of 24 metres, it can necessarily be translated into a property that holds substantial commercial value. Hence it is imperative to take valuation of prevailing property as well as recent transaction into regard, with respect to the area, so that with the help of fair market valuation, the property’s current assessment can be carried out, on the basis of which compensation can be inferred. The case of Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 (PC) should be referred to by Jennifer, since it posits the principle that the market value of the property is the foundation for compensation in the case of compulsory acquisition scenarios (Ti, 2019).

Disturbance Compensation

In consonance with Rule 6 of the Land Compensation Act 1961, Jennifer can go ahead with claiming disturbance compensation. Simply put, the disturbance compensation revolves around compensations for owners who has experienced dispossession due to natural, reasonable or direct consequences. Aside from substantiating expenses incurred due to immediate relocation, this compensation also encompasses expenses pertinent with losses experienced by the business during the course of the transition. If Jennifer has fixated upon an alternative premise, then the cost associated with transportation, fixture reinstallation and movement of necessary furniture and other materials to those locations can be conveniently evaluated, so that the new place can substantiate her existing business’ needs. For instance, in the case of Wheeler v Leicester City Council [1985] AC 1054, the focal point fixated upon disturbance compensation, which inculcated reasonable and direct consequences of dispossession (Ameyaw & de Vries, 2021). As a consequence of which, the Leicester City Council has to compensate for expenses incurred due to relocation and losses during the transition.

Claiming for business profit loss is also a viable option for Jennifer, considering her age as well as the implication of dispossession upon her business. Owing to the fact that Jennifer is currently 65 years old, as per the Disturbance Compensation of Land Compensation Act 1961, she can go for either 'extinguishment' basis or the 'relocation' basis for calculating her compensation.

If Jennifer opts for relocation, then the cost associated with relocating to the new location, along with the temporary losses should be compensated duly by the CCC. On top of that, concerning her new alternative premises, she can even claim for the expense pertaining to transition, rebranding, potential deterioration of revenue generation as well as transportation cost during the course of relocation (Wyatt, 2022). Alternatively, if she opts for extinguishment basis, then she can evaluate her business as per today's market price and claim the compensation on the basis of her fixtures, goodwill, fittings and other coherent facets associated with her business. In this instance, since her business can be categorized as unique in nature, relocating to a new place would essentially lessen consumer loyalty. Hence, opting for this option due to her age-related concern is also viable in nature. For the sake of consolidating her conviction regarding age-related concern and its implication on business relocation, the case of Regent Auto Centre Limited v London Borough of Brent (2004) EWHC 413 can be cited. In view of the fact that the verdict given by the court, in this case, substantiated the claimant's right to compensation for disturbance, including depreciation in profits due to relocation.

Capital Investment Compensation

Jennifer Is entitled to claim for compensation from CCC for substantiating her financial investment in her shop, which revolves around her stock, working capital, along with fittings and fixtures. Since these investments are crucial for maintaining her business success, it is imperative for CCC, as per the LCA 1971, to take this aspect during the course of overall assessment. For instance, in the case of Smyth v Secretary of State for the Environment (1979) 39 PCR 431, the gravity of compensating for capital investments has been underscored to a great extent, where the verdict distinctly delineated that during the course of evaluating for compensation, determining the value capital investment is compulsorily (Wyatt, 2022). Aside from that, Jennifer is also entitled to claim for the loss of interest pertinent to the capital investment she incurred in the business. The rate of interest on her investment is 12%, and this should be calculated based on the amount she has invested in stock, working capital, and fittings and fixtures.

All of the aforementioned points can be substantiated as claim heads on the basis of the given case study. However, one of the interesting aspects that should be taken into consideration in this particular context is that Jennifer should not claim disturbance compensation, pertaining to her bout of ill health. In view of the fact that Rule 6 of the Disturbance Claim distinctly mentions that the cause of the claim should always revolve around reasonable, natural, and direct consequence of the claimant's dispossession. The case of Bailey v Derby Corporation (1964) 192 EG 817 vividly establishes the fact that compensation owing to unrelated factors, such as ill health, cannot be substantiated, hence it would only weaken her case. If she concentrates upon the aforementioned points along with the legal references, then deriving necessary compensation from CCC is inevitable in nature (Notess et al., 2021).

Expected compulsory valuation of the property

After meticulously drawing a comparative analysis, the similar properties with their respective weightage, the expected compulsory evaluation of the property has been deduced to £882,444.

Part C

The implications of Sudden Relocation on Jennifer's Business as well as the Compensation Expectations are hereby listed below:

The magnitude of impediments that Jennifer should encounter, provided she decides to relocate her existing business due to sudden compulsory acquisition of her shop by CCC would be immense for her to manage, given her age and nature of business. Undoubtedly, she would stumble upon experiencing loss of consumer loyalty, but at the same time, the revenue generation, which is currently experiencing would also hinder extensively, during the course of initial years of business operation. Challenges brought forth by relocation hamper existing customer relationships (De Maria, 2019). As a consequence of which, the foot traffic decreases radically, which subsequently leads to additional expense. The following segment extrapolates the rudimentary aspect which would potentially act as impediment for Jennifer and the compensation Jennifer should expect from CCC to assist her business, along with relevant legal provisions and case instances.

Challenges Due to Sudden Relocation

  1. It can be assumed that Jennifer's business has a certain loyal consumer base, which she has built over time. Disruption of consumer footfall would inherently occur during the course of relocation. Not only would it lead to consumer disorientation, but at the same time, sales would also experience a steep nosedive, since existing consumers might not be able to locate the new premises immediately.
  2. Sudden fall in foot traffic necessarily translates into loss of business viability (Layard, 2019). Aside from being detrimental to her business’s revenue generation, if accessibility to her new premise is not quite feasible for existing consumer base, then developing new consumers in the new locality brings up new challenges, which would act as hindrances for Jennifer, as of now, thereby further affecting sales.
  3. From an apparent vision it would seem that since Jennifer's business already carries a consumer loyalty, rebranding it would be a seamless process. However, in reality, opting a new location and developing new consumer base comes with extensive marketing cost, which should not only influence her initial profit, but at the same time, if adequate measures are not inculcated during the course of rebranding, then the period of transition can be prolonged extensively (Cullingworth, 2021).
  4. Even if it is considered that meticulous planning is conducted with due diligence, then also there is a huge probability that there might be a transition period during which Jennifer's business operations might be interrupted, leading to potential revenue loss.

Jennifer has the right to seek compensation from CCC in order to alleviate the financial burdens resulting from these challenges. The legal provisions substantiating Jennifer's entitlement encompass:

  1. In consonance with Rule 6 of the Land Compensation Act 1961, Jennifer possesses the prerogative to invoke disturbance compensation, premised upon the reasonable, natural, and immediate ramifications of dispossession (Notess et al., 2021).
  2. Relocation Basis: Jennifer can assert her claim on the premise of the 'relocation' basis, warranting compensation for the devaluation of profits during the initial post-relocation period. A precedent delineated in the case of Regent Auto Centre Limited v London Borough of Brent (2004) EWHC 413 (Admin) serves as an illustrative exemplar, wherein compensation was awarded to redress disruptions stemming from relocation (Catney & Henneberry, 2019).
  3. Jennifer can legitimately advance her claim for indemnification in view of the erosion of her business goodwill resulting from the turbulence associated with relocation. The juridical precedent in the case of Davies v National Coal Board [1989] 1 WLR 105 substantiates the admissibility of claims for the dissipation of goodwill, bolstering the foundation of her petition (Byrne, 2020).
  4. The presentation of a judicious and equitable claim necessitates Jennifer's demonstration of the judicious and pragmatic nature of her assertions, coupled with proactive measures aimed at alleviating the repercussions of her relocation.

Quantifying Compensation

qualifying compensation

Considering her current business landscape, if she opted not to retire, then the valuation of her business stands out to be a sum of £555,560. In this instance, the cost of capital is assumed to be 12%. Apart from that, the growth rate that her business could potentially experience after an initial three years is expected to be 5% per annum. Hence, to derive the present valuation of her establishment, it is imperative to sum up the terminal value, which stands out to be £456411.43, resulting in £555,560.12.  

References:

Ameyaw, P.D. and de Vries, W.T., 2021. Toward smart land management: land acquisition and the associated challenges in Ghana. A Look into a Blockchain Digital Land Registry for Prospects. Land, 10(3), p.239.

Byrne, M., 2020. Generation rent and the financialization of housing: A comparative exploration of the growth of the private rental sector in Ireland, the UK and Spain. Housing Studies, 35(4), pp.743-765.

Catney, P. and Henneberry, J., 2019. Change in the political economy of land value capture in England. Town Planning Review, 90(4), pp.339-358.

Cullingworth, J.B., 2021. Essays on housing policy: the British scene. Routledge.

De Maria, M., 2019. Understanding land in the context of large-scale land acquisitions: A brief history of land in economics. Land, 8(1), p.15.

Layard, A., 2019. Privatising land in England. Journal of Property, Planning and Environmental Law, 11(2), pp.151-168.

Notess, L., Veit, P., Monterroso, I., Sulle, E., Larson, A.M., Gindroz, A.S., Quaedvlieg, J. and Williams, A., 2021. Community land formalization and company land acquisition procedures: A review of 33 procedures in 15 countries. Land Use Policy, 110, p.104461.

Ti, E.S.W., 2019. Compensating regulation of land: UK and Singapore compared. Journal of Property, Planning and Environmental Law, 11(2), pp.135-150.

Wyatt, P., 2022. Property valuation. John Wiley & Sons.

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