Director of Buildings and Lands v Shun Fung Ironworks Ltd: PC 20 Feb 1995

Compensation is payable for losses properly anticipating resumption of possession of the land. The principle of equivalence gives rise to the statutory right to interest under section 11(1). The council explained the conceptual foundation of the discounted cash flow basis of calculation: ‘In this calculation the discount rate, or capitalisation rate, comprises the rate at which an amount of money payable at a future date should be reduced to arrive at its present value. Its present value is the price which a person would pay now for the right or prospect of receiving the amount of money in question at the future date. Three ingredients can be identified in the discount rate. One is the rate of return the potential purchaser would expect on his money, assuming that the payment to him at the future date is free of risk. A second ingredient is the allowance the potential purchaser would make because of the likely impact of inflation. He is buying today, in today’s currency, the right to be paid at a future date an amount which, when paid, will be paid in tomorrow’s depreciated currency. The third ingredient is the risk factor. The greater the risk that the purchaser will not receive in due course the future payments he is buying, the higher the rate of return he will require.’


Lord Nicholls, Lord Keith of Kinkel, Lord Mustill, Lord Slynn of Hadley, Lord Lloyd of Berwick


Times 27-Feb-1995, [1995] 2 AC 111




Compulsory Purchase Act 1965 11(1)

Cited by:

CitedHalstead v Council of City of Manchester CA 23-Oct-1997
Land had been compulsorily purchased, and the compensation agreed, but after long delays in payment, not as to the calculation of interest.
Held: Interest would be payable from the date of entry. The limitation period arose only once the . .
CitedMohammed Aslam v South Bedfordshire District Council CA 21-Dec-2000
The claimant appealed an award of the Lands Tribunal of compensation for an order discontinuing his use as a slaughterhouse of premises of which he held a long lease. The tribunal had applied a discount for wastage on sheep carcasses of 25%, but had . .
CitedFaraday v Carmarthenshire County Council CA 10-May-2004
The claimant appealed against an award of compensation on the compulsory acquisition of his land by the defendant.
Held: The award was incorrect. The authority had wrongly deducted a sum in respect of ‘freed up time’ – which would have allowed . .
CitedRyde International Plc v London Regional Transport CA 5-Mar-2004
The landowner had developed land which was then made the subject of compulsory purchase. The court was asked how the compensation was to be calculated. The landowner expected to sell the development as a whole. The respondent argued that the profit . .
CitedMoto Hospitality Ltd v Secretary of State for Transport CA 26-Jul-2007
The company sought damages to its business on a motorway service station when works closed an access road.
Held: The Secretary of State’s appeal succeeded. A claim for compensation under section 10 had not been established, at least in respect . .
CitedStar Energy Weald Basin Ltd and Another v Bocardo Sa SC 28-Jul-2010
The defendant had obtained a licence to extract oil from its land. In order to do so it had to drill out and deep under the Bocardo’s land. No damage at all was caused to B’s land at or near the surface. B claimed in trespass for damages. It now . .
Lists of cited by and citing cases may be incomplete.

Land, Commonwealth, Damages

Updated: 19 May 2022; Ref: scu.79977