Compulsory purchase compensation principles clarified in Quyoom vehicle dismantling case

The Upper Tribunal (Lands Chamber) delivered a significant judgement on 19 August 2025 in Zafar Quyoom & Ors v The Borough Council of Middlesbrough, establishing important principles for compensation following compulsory acquisition of commercial premises. The case centred on a vehicle dismantling business acquired under the Council of Middlesbrough (Middlehaven) Compulsory Purchase Order 2014.

The claimants—Zafar Quyoom, his wife Amina Quyoom, and their company Jap Euro North East Limited—operated from Commercial Street premises before the council's compulsory acquisition. Whilst both parties agreed on land compensation, the primary dispute concerned business valuation methodology.

Mr Quyoom, who entered the vehicle dismantling industry in 1992 and served as the company's sole manager, provided crucial evidence regarding the business's financial operations. The claimants initially sought £5,074,085 in compensation, comprising future profits, operational goodwill, and management time related to the acquisition process.

The Tribunal's assessment revealed stark differences between expert valuations. The claimants' forensic accountant, Mr Parton, calculated stock value based on potential earnings from dismantled parts over a decade, incorporating future business operations. However, the Tribunal found his assumptions insufficiently substantiated. Conversely, the council's forensic accountant, Mr Pearson, presented a significantly lower valuation, emphasising inadequate operational records and highlighting uncertainties surrounding future earnings.

Both experts grappled with market dynamics affecting the business model, including stock degradation and extended sales timelines for disaggregated vehicle parts. These factors proved critical in determining appropriate compensation levels.

The Tribunal ultimately awarded compensation totalling £804,950, comprising:

• Business stock valuation at acquisition: £657,500
• Management time for closure processes: (amount incorporated within total)
• Business equipment: £132,450

Crucially, the Tribunal rejected claims for future profits, citing the cessation of business operations. This decision underscores the distinction between compensation for actual losses versus speculative future earnings in compulsory acquisition scenarios.

The judgement emphasises several key principles. Compensation claims require robust substantiation, particularly regarding business valuations and projected losses. The Tribunal's approach demonstrates that whilst Section 5 of the Land Compensation Act 1961 provides the framework for compensation, the quality of evidence supporting valuations remains paramount.

The case illustrates the complexities inherent in valuing specialist businesses during compulsory acquisition. Vehicle dismantling operations present unique challenges, with stock comprising vehicles at various dismantling stages and parts with uncertain sale timelines. The Tribunal's methodology provides guidance on addressing such complexities whilst maintaining rigorous evidential standards.

This judgement establishes precedent for future compensation claims involving business disruption through compulsory acquisition. The decision reinforces that successful claims depend on comprehensive documentation of business operations, realistic market assessments, and substantiated loss calculations.

The ruling clarifies valuation principles applicable to both voluntary and compulsory business purchases, providing valuable guidance on distinguishing between recoverable losses and speculative claims. The emphasis on evidential quality over claim magnitude offers important direction for practitioners handling similar cases.

The Quyoom decision contributes significantly to compulsory purchase compensation jurisprudence, establishing clear parameters for business valuation whilst highlighting the importance of thorough preparation in supporting compensation claims.