as an American lawyer my first question to you is...did you check the compression as it existed prior to your running the engine? if not, how will you show that something didn't occur to the properly running engine which caused an excellerated rate of wear on the upper engine which could account for the decrease in compression? there seems to be a serious causation issue here. you and I know that nothing short of running sand rather than motor oil, or having the engine inhale serious grit without an air filter will cause such a drastic drop in compression, but will a lay person buy it...I am betting not. You could make a case by attempting to purchase another refurbished engine from the same guys and testing its compression...this may bolster your case by setting up a commonality of action...it is kind of a streach but who knows. If you were under US law I would tell you to look up the Consumer Protection Act...Honestly I am not terribly familiar with it, but I would guess that it has an analoge in UK law. good luck.

PS: State-side we traditionally take 40% not 30%...so you would be looking at no more than a couple of hundred U.S. Dollars....aka don't bother.