Court of Appeal
Published May 8, 2007
Welford and Others v EDF Energy Networks (LPN) Ltd

Separate compensation for loss of profit for disturbance was too remote if compensation had been awarded for diminution in the market value of land.

The Court of Appeal (Lord Justice Thomas, Lord Justice Scott Baker and Lord Justice Chadwick) so stated on April 3, 2007 dismissing the appeal of the claimants, Terrence Welsford and two others, from the Lands Tribunal which had allowed a claim under the Electricity Act 1989 for diminution in the value of land and refused compensation for loss of profit for disturbance by the presence of underground electricity cables in the land which they had purchased for business.

LORD JUSTICE THOMAS said that although paragraph 7 of Schedule 4 to the Electricity Act 1989 distinguished between compensation under subparagraph (1) for diminution in the value of land and under subparagraph (2) for disturbance, the compensation payable under the whole of paragraph 7 was to be assessed on the general principles applicable to the payment of compensation for compulsory acquisition which recognised those two separate heads as elements of the claim for compensation injurious affection and disturbance.

Where the business was not in existence when the land was compulsorily acquired, then ordinarily the market value of the land would reflect the business opportunity that was contemplated.

Compensation measured by the market value of the land would be treated as fair compensation, as to enable the purchaser to buy other land as part of the investment he would need to make to start the business he was contemplating.

A claim for loss of profits would therefore be treated as too remote.

Times Recommends

• Linklaters trounces rivals as UK's biggest firm
• Clifford Chance profits plunge 37 per cent
• Casual drinkers hit by spread of 'dry' zones