In 2004 Wanis International Foods – a leading distributor and wholesaler of quality World Foods – realised that we faced the start of a long journey towards Compulsory Purchase Order (CPO) to secure land for the Olympics hockey pitch.
“Our CPO journey pretty much ended in 2015, albeit we still have some outstanding claims. The good news is that our business is still operating and providing great products and service to our customers.”
Drawing on this experience, I know the bottom line for businesses in the Victoria Road area of Park Royal facing the HS2 CPOs is that you don’t like it, you don’t want it, but you’ve got no choice. You are not in control of whether it will happen, but you are in control of how you will manage the transition.
Kapil offers businesses his main points to consider when going through the CPO process:
Make the best out of a poor situation
There was no handbook when we went through our CPO, and each time particular circumstance will be different.
1) First of all to get an advisor. Don’t scrimp on this as it will pay dividends in the long run. Make sure you meet at least two different potential advisors and ideally get references.You may need a surveyor for property valuation matters and to help you negotiate, and then possibly a CPO surveyor for your compensation claim, if any. You may need a project manager to help you plan and organise the move, a lawyer to deal with the legal aspects of any agreement, and lastly you may need a forensic accountant, who specialises in CPOs and help with a claim for any impact on your business.
2) If at all possible, get an undertaking for reasonable costs before you sign up your professional advisor(s), or ask that the advisor(s) do the work ‘at risk’ until such time as formalised/agreed by HS2.
3) Understand the difference between a Private Treaty vs. CPO – Private Treaty is preferred, which basically follows the principals of CPO, but is really an agreement between two parties (with the threat of CPO hanging over you in the background) – it is a bit like arbitration.
Three primary losses
For Wanis, and I suspect most business, there are three primary losses:
1) Property loss (not least Stamp Duty Land Tax)
a. Relocation costs (move costs, fitting out new building costs and costs associated with mitigating business losses, i.e. advertising/signage/mail outs)
b. Business Impact/loss of profits
And then there may be other business specific costs.
Evidence is essential
At times it felt like we were being asked to jump through hoops just for the sake of it and provide things that were obvious and well known, but the reality is, if you don’t provide historic evidence then you haven’t provided proof. If you haven’t got proof, it’s just hearsay.
Key pointers on evidence
There will be a focus on ‘contemporaneous evidence’, so:
1) Keep a diary or journal of any important decisions
2) Keep a record of any meetings where your move is discussed, or the implications of the move on the business. Document it, and email it to a colleague/ advisor so you can prove that was your thinking at the time.
3) Record on a spreadsheet
g. Time spent/admin
h. Start a Daily calendar of what you are doing
Record every major decisions or any decision you think might be beneficial to you later on.
We were asked repeatedly, what did my involvement in the CPO process preventme/others from doing, or what I would have been doing otherwise. What was my track record of doing it before? E.g. going to trade shows, visiting customers, meeting suppliersThe acquiring authority will want you to DIRECTLY show cause and effect, and that any cause was a “direct result of the CPO”. If you can’t demonstrate this, you won’t get compensation for it.
I.e. what accounts/customers/business plans did the CPO specifically prevent Wanis progressing and how can this be proved that it related to the CPO? Or would you have lost these in any event!
The acquiring authority will treat all companies to a high standard of evidence and record keeping – as if they were large corporates. Of course many SMEs don’t have such established processes. This means you must find a way to document evidence and have it recorded in communications with third parties, even if it is HS2 themselves (i.e. in presentations or letters).
We were also asked to provide evidence such as:
– Board minutes and minutes of other meetings between directors
– Budgets and management accounts
– Records of senior management meetings
– Records of any major decisions/omissions
– Salaries and contracts (even if only basic)
Share relevant evidence with third parties (Accountants, Bankers, etc.), so that they become your official budgets/documents and harder for the acquiring authority to challenge at a later date.
The reality is for most of you that your days will just become longer
It will be very difficult to get compensated for your time, but you can hire experts to reduce the impact on your time, and you’ll need to prove the impact on the business of the loss of your focus/time, if you are to stand any chance of being compensated for it.
Talk to others in similar situations, so that you build up a collective understanding on of what’s going on in the wider marketplace, and understand what arguments are being put to others.
Plan the relocation and harness the opportunity for business improvement
Complex moves demand planning, planning and re-planning. Don’t underestimate this. Have relocation planning meetings with your Operational Team and start at least 6-12 months before any move. It’s also an opportunity to do things differently in your business, and correct things you don’t like about your current operations (e.g. layouts, machinery etc.)
CPOs are not a get rich scheme
The CPO process is supposed to put you in no worse or better position that you were in before, so don’t think you will get rich from it. I say this because, by and large, I believe the acquiring authority wants to be fair, but they also are aware that there are some unscrupulous people out there that will try to get more than they are entitled to. The acquiring authority has to look after the public purse, and so are accountable for any payments.
The CPO process is not collaborative, but it doesn’t have to be hostile. As tempting as it may be at times, don’t lose your temper, or take things personally, it is far better to direct the energy at ensuring you are well equipped with evidence.
Kapil Wadhwani is a Director at Wanis, one of UK’s largest specialist food and drink contributors.
Wanis has been serving local communities for over 52 years. As a world foods distributor, Wanis have strong links with the ethnic retail and catering business community and supply all of the UK’s main high street supermarkets.
Kapil worked in the City in both accountancy and banking prior to joining Wanis 17 years ago, where he is currently responsible for Business Development, Marketing and Sales to the major high street supermarkets. In 2004, after having been in Stratford for over 10 years, the business was told they faced a Compulsory Purchase Order (CPO) for the Olympic Regeneration Scheme and would have to find new premises.
Compulsory Purchase and Compensation, Barry Denyer-Green (Estates Gazette, 2013)
Compulsory purchase and compensation booklet 2: compensation to business owners and occupiers (Office of the Deputy Prime Minister, 2004) Note this is now rather out of date and therefore not entirely accurate.
The Royal Institution of Chartered Surveyors operates a compulsory purchase helpline: 020 7334 3714
Source: WLB blogger