SME (Hammersmith) Limited v Transport for London
Decision date: 6 March 2017
Neutral citation: [2017] UKUT 91 (LC)
Overall AI summary confidence: medium
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: medium
This reference concerned the valuation of compensation for extinguishment of SME (Hammersmith) Ltd's KFC leasehold business taken for Crossrail, where the parties agreed maintainable earnings of £107,000 but disputed the earnings multiplier (claimant 17; TfL 7.5). The tribunal recorded agreed factual assumptions and heads of loss and considered four inter‑franchise transactions and a joint DCL report as potential comparables, with contested adjustments for timing/recession, freehold content, drive‑thru mix, post‑acquisition trading and option/value components. No final multiplier determination is recorded in the available notes.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
When assessing compensation for extinguishment of a leasehold trading business by reference to multiples from inter‑franchise transactions, one must identify and adjust for differences in market timing/conditions, portfolio composition (freehold versus leasehold; drive‑thru versus high‑street) and any post‑acquisition improvements or implicit deal components (such as freehold value or option rights) before deriving an appropriate earnings multiple for the single unit.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The notes record expert commentary that the QSR/fast‑food sector (and KFC specifically) showed relative resilience, possibly improving the relevance of post‑recession comparables, and disagreement over methodology (historic EBIT/EBITDA versus forward‑looking trading potential and conversion between EBITDA and EBIT bases), but no clear binding dicta on those methodological choices.