Compulsory purchase – Compensation – Costs – Lessees permitting companies of which they were directors to conduct scrap metal businesses from land – Land compulsorily acquired for Crossrail project – Appellants seeking compensation for loss of personal remuneration for unexpired term of lease – Claim allowed in part – Appellants appealing – Whether tribunal erring in law in ordering appellants to pay 80% of respondent’s costs in period before settlement offer – Whether tribunal wrong to conclude respondent successful party – Appeal dismissed
The appellants carried on business from Bishop’s Yard at Lake Avenue in Slough, adjacent to the main Great Western Railway line. The family business focused on dealing in scrap metal and was conducted through a number of companies. The greater part of the land, extending to about 1.15 acres (“the reference land”) was held under a series of leases from Network Rail and its predecessors. The last such lease was for a term expiring on 22 December 2031 at an open market rent to be reviewed at five-yearly intervals.
On 4 February 2014 the reference land was compulsorily acquired by the respondent under powers conferred by section 6 of the Crossrail Act 2008. A company of which the appellants were directors and which had traded from the reference land discontinued its business within three months of receiving the respondent’s notice of entry. The company subsequently went into liquidation with substantial unpaid debts. The appellants sought compensation totalling £4,177,782. In a letter to the appellants dated 8 February 2017, the respondent made a sealed offer to settle the claim for £378,000 plus costs, which the appellants refused.
The tribunal concluded that the only head of claim on which the appellants were entitled to compensation was their expenditure in clearing the site, totalling £46,815. The tribunal then ordered the appellants to pay 80% of the respondent’s costs of the reference incurred before 9 February 2017 and its costs incurred on or after 9 February 2017: [2017] UKUT 405 (LC); [2019] PLSC 190.
The appellants appealed against the tribunal’s decision on costs relating to the period before the sealed offer was made. The appellants accepted that the tribunal could not be criticised for awarding the respondent costs from that date, the award of compensation having fallen well short of the sealed offer. The main issue was whether the tribunal erred in law in ordering the appellants to pay 80% of the respondent’s costs in the period before the offer was made; and whether the tribunal was wrong to conclude that the respondent was the successful party in the reference.
Held: The appeal was dismissed.
(1) As was implicit in para 12.2 and 12.3(1) of the Upper Tribunal (Lands Chamber) Practice Directions 2010, the starting point for the exercise of the tribunal’s costs discretion was to decide which of the two parties in the reference was the successful party. That exercise had to be undertaken with realism and good sense, having regard to all the circumstances of the case. The guidance in the Practice Directions was general. In a case where the acquiring authority had made an unconditional offer to settle and the award of compensation did not exceed that offer, it was in principle open to the tribunal, looking realistically at all the circumstances of the case, to conclude that the “successful party” in the reference, including the period before the offer was made, was the acquiring authority, not the claimant, and to exercise its costs discretion accordingly. The concept of the successful party in the proceedings as a whole, both before and after the making of an offer to settle, was not rigid. It would always depend on the specific facts and circumstances of the case in hand. The facts and circumstances would vary widely from one case to another: Emslie & Simpson Ltd v Aberdeen District Council [1994] 1 EGLR 33, Purfleet Farms Ltd v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 1430; [2003] 1 EGLR 9 and Blakes Estates Ltd v Government of Monserrat (Practice Note) [2006] 1 WLR 297 considered.
(2) The tribunal’s conclusion that the respondent was the “successful party” in the reference was not in conflict with any relevant case law and could not be faulted. The appellants could not say they had beaten the sealed offer and were the successful party in the reference for that reason. By that measure they were clearly the unsuccessful party; the award of compensation had fallen well short of the offer. The appellants had been awarded compensation amounting to only a tiny fraction of the total claim on a single, small and distinct issue. Looking at the reference as a whole to establish which was the successful party was not inconsistent with the guidance in the Practice Directions. The crucial point was that the very modest success they had achieved was not enough to displace the finding that the respondent was truly the successful party in the reference when viewed as a whole. That was a conclusion the tribunal could properly reach in the particular circumstances of the case. In exercising its broad discretion as to costs, the tribunal always had to adopt an approach sensitive to the whole facts and circumstances of the case before it.
(3) The usual rule that the successful party should be awarded its costs was not inflexible but was subject to modification where a different order was justified. The tribunal was entitled to take the view that a different order was justified for the period before the respondent made its sealed offer: the compensation awarded to the appellants, though comparatively modest, was not insignificant; the respondent could have protected itself by making an earlier offer; and the appellants had to proceed with the reference to get the compensation they did. The tribunal did not think that, in the particular circumstances of this case, those factors warranted either an award of costs in the appellants’ favour or its making no order for costs, for the pre-offer period. They were strong enough, however, to justify a “discount” in the award of costs to the respondent, reducing it to 80%. That was a matter for the tribunal’s discretion which it exercised lawfully and was a sensible way of reducing the award of costs to allow for the appellants’ limited success. It was not wrong in principle.
Mark Warwick QC (instructed by Gordon Dadds LLP) appeared for the claimants; Guy Williams (instructed by Pinsent Masons LLP) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read a transcript of Bishop and another v Transport for London
