Compensation for injurious affection — Reference to Lands Tribunal — Acceptance of sealed offer — Provision as to costs after date of offer — Whether offer providing for costs — Whether tribunal entitled to exercise discretion as to costs
The parties agreed to refer to the Lands Tribunal the determination of compensation to be paid by the compensating authority to the claimant for injurious affection caused by works to construct the Jubilee Line extension. A hearing date was fixed and the president of the tribunal gave directions as to the exchange of outstanding evidence in preparation for that hearing. On the same day as the directions were given, the authority delivered to the tribunal a copy of an unconditional sealed compensation offer. The offer was also sent to the claimant’s solicitor. It contained an offer, under r 44 of the Lands Tribunal Rules 1996, to pay compensation of £60,000 “plus your client’s standard basic costs (to be assessed failing agreement)”.
The claimant eventually accepted the settlement offer, but the parties failed to agree on the appropriate provision for costs. The reference hearing went ahead solely to determine that issue. To avoid the risk that that dispute was not covered by the arbitration agreement under which the reference had been made, the parties undertook the enter into a further agreement enabling the tribunal to determine the meaning of the settlement.
The claimant contended that “your client’s standard basic costs” meant all costs that it had incurred up to the date upon which it had accepted the offer, and thereafter to the date upon which the tribunal made the necessary consent order. The authority argued that the costs referred to were only those incurred up to the date of the offer letter, and that, under the settlement, costs after that date were payable by the claimant to the authority.
Held: The reference in the offer to r 44 made it clear that its purpose was to obtain the protection of section 4 of the Land Compensation Act 1961. The construction of the offer contended for by the claimant would vary so widely from the purposes of the sealed offer that it would be impossible to construe it in that way unless the words used could bear no other meaning. The natural, and correct, construction of the authority’s offer was that it referred to costs that had already been incurred. It was equally impossible to construe the sealed offer as requiring the claimant to agree to bear both its own costs and those of the authority subsequent to the date of the offer. That would have been the outcome had the claimant rejected the offer and had the tribunal proceeded to make an award in a sum that did not exceed it. However, the claimant had accepted the offer. Correctly construed, the settlement made no provision for costs after the date of the sealed offer, and the tribunal had jurisdiction to make appropriate orders as to costs, pursuant to section 3(5) of the Lands Tribunal Act 1949.
The proper exercise of the tribunal’s discretion as to costs was that a successful claimant was entitled to costs incurred in the proceedings unless there was some special reason to the contrary: Purfleet Farms Ltd v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 1430; [2003] 1 EGLR 9; [2003] 02 EG 105 applied. A claimant whose claim was satisfied by an offer that it had accepted was a successful claimant. The claimant in the instant case should be awarded the costs that it had incurred during the 21 days after which the offer was made, which was a reasonable time in which to consider and accept it. No costs should be awarded after that period, since the claimant’s delay in accepting thereafter was to be treated as being unreasonable. Moreover, this conduct had put the authority to expense, and constituted a special reason justifying an award of costs in favour of the authority from the end of the 21-day period to the actual date of acceptance. Thereafter, the costs should lie where they fell.
Galina Ward (instructed by Barlow Lyde & Gilbert) appeared for the claimant; David Holland (instructed by Watmores) appeared for the compensating authority.
Sally Dobson, barrister
