To build the Grand Paris transport network, the Société du Grand Paris expropriates premises in which a company runs a business. The Paris court of appeal awards it 410,300.64 euros of relocation costs, without allowance for wear, an indemnity for the loss of its security deposit, and refuses to compensate a loss of goods for want of accounting evidence. The Cour de cassation (the French supreme court for civil matters), on 29 June 2022, in a reported decision, settles three questions every expropriation memorandum for a business meets. Relocation costs bear no allowance for the wear of the fittings lost, because the indemnity must allow the trader “to be placed in the situation in which it would have been had the expropriation not taken place”. The loss of the security deposit is not a loss caused by the expropriation, since its return falls on the original landlord. And a judge who finds that a stock loss exists cannot refuse to assess it because the evidence is insufficient. For the valuer, this is a list of what is quantified, how, and what is not claimed from the wrong debtor.
The facts
A company runs a business in leased premises, expropriated for the benefit of the Société du Grand Paris; the premises had earlier been acquired by the public land agency of the Île-de-France region, the original landlord, then transferred to the Société du Grand Paris. The Paris court of appeal, on 21 January 2021, sets the indemnities due to the evicted tenant: an indemnity for relocation costs of 410,300.64 euros, without allowance for wear, an indemnity for the loss of the security deposit, payable by the acquiring authority “subject to recourse later” against the land agency, and the rejection of the claim for loss of goods and stock, for want of evidence of its amount.
The Société du Grand Paris appeals against the first two heads; the tenant, by cross-appeal, against the rejection of the loss of goods.
The decision
The third civil chamber (Cass. 3e civ., 29 June 2022, no. 21-15.741, reported) dismisses the appeal on relocation: “the indemnities awarded must therefore allow a company running a business in the expropriated premises, which wishes to relocate in order to continue its activity, to be placed in the situation in which it would have been had the expropriation not taken place”, and the court of appeal “rightly refused to apply to the indemnity for relocation costs […] an allowance reflecting the wear of the fittings of the expropriated premises”.
It quashes on the security deposit, under article 1743 of the Civil Code and article L. 321-1 of the Expropriation Code: on a transfer of ownership of leased premises, “the return of the security deposit falls on the original landlord and, unless otherwise stipulated, is not transmitted to its successor in title”, so that “its non-return does not constitute a loss resulting from the expropriation payable by the acquiring authority”. It also quashes on the loss of goods, under article 4 of the Civil Code: “the judge cannot refuse to compensate the damage whose existence in principle he has found, on the ground of the insufficiency of the evidence supplied by the parties”. The case is sent back on those two points to the Paris court of appeal, differently composed.
What this changes for valuation
Relocation is quantified as new. The acquiring authority reasoned like an insurer: the fittings lost were old, replacing them as new would enrich the trader. The Court rejects that reasoning, because the trader who relocates must install new fittings to resume its activity, and that cost is what the expropriation imposes on it. The valuer therefore quantifies relocation costs on quotes for fitting out the new premises, fixtures, signage, technical installations, connections, removal, without a wear coefficient. What remains debatable is the scope: fittings equivalent to those lost, not an upgrade, and the report shows it by describing what existed.
Relocation or eviction: two logics. The relocation indemnity presupposes that the activity continues elsewhere; if transfer is impossible, the indemnity covers the loss of the business, as recalled by the article on the expropriation of a regulated business. The report first establishes which of the two hypotheses is realistic, with the replacement premises available and the transferable clientele, then quantifies the right one. It does not add both.
The security deposit is claimed from the original landlord. The deposit paid to the initial landlord remains owed by it, unless the deed transferring the premises passes it on; the acquiring authority that bought the premises does not answer for it, and the expropriation judge does not include it in the indemnity. The valuer listing the evicted tenant’s losses flags this item as a claim against the original landlord, outside the expropriation indemnity, so that the tenant’s counsel pursues it by the right route. The glossary describes the indemnité d’éviction and its components.
An established loss is assessed, even poorly documented. The tenant asked for a lump sum of 5,000 euros for its lost stock, without accounting evidence; the court of appeal rejected it, the Cour de cassation requires it to be assessed. For the valuer, this does not dispense with gathering evidence, inventories, purchase invoices, accounts for the year; but where they are missing, the report proposes a reasoned estimate, for instance from turnover and the usual stock rotation in the trade, rather than a silence that would lead the judge to a refusal now censured.
A memorandum item by item. The ruling illustrates what an expropriation memorandum for a business must contain: for each head, the basis, the debtor, the method and the documents. Relocation costs on quotes, trading disruption on the accounts, stock loss on inventory or estimate, removal costs, reinvestment indemnity where applicable; and, separately, claims against the landlord. The guide on expropriated business premises gives the outline.
What the valuer takes from it
- The expropriated trader’s relocation costs are quantified without allowance for the wear of the fittings lost, for equivalent fittings.
- The loss of the security deposit is not a loss caused by the expropriation: it is claimed from the original landlord.
- The judge cannot refuse to assess a stock loss whose existence he finds; the report proposes a reasoned estimate where documents are missing.
- Relocation and loss of the business are mutually exclusive hypotheses; the report establishes which is realistic before quantifying.
- The memorandum presents each head with its basis, its debtor, its method and its documents.
Further reading
The Compulsory purchase and pre-emption page describes the assignment, its timescale and its fee. The guide My business premises are compulsorily purchased and the glossary entries indemnité d’éviction, indemnité de remploi and trouble commercial complement this article. On the same theme: Compulsory purchase of a regulated business: proving relocation and Compulsory purchase in France: three recent Cassation rulings. The decision is available on Légifrance.
What next
An expropriated business to relocate elsewhere, and heads of indemnity the acquiring authority disputes one by one?
I quantify relocation costs on quotes, without allowance for wear, stock loss and trading disruption with the accounts, and separate what falls on the acquiring authority from what falls on the landlord, for the memorandum before the expropriation judge.
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