A Calderbank offer does not provide cost protection after it is withdrawn, even if it is withdrawn on the first day of trial, the Upper Tribunal (Lands Chamber) has determined in Pro Investments Ltd v London Borough of Hounslow [2022] UKUT 54 (LC).
The case concerned a compulsory purchase application heard over five days commencing on 12 April 2021 where the UT awarded the claimant significantly less than the amount of a Calderbank offer made by the acquiring authority on 10 March 2021. The parties agreed that the claimant was entitled to its costs of the reference up to and including 10 March 2021 in accordance with the principle that the expenditure incurred pursuing its claim for compensation was part of the expense imposed on it by the compulsory acquisition of its land.
The acquiring authority’s offer of 10 March 2021 headed “without prejudice save as to costs” was “in settlement of the claimant’s claim” but did not include certain items which the acquiring authority agreed to pay “to the extent they are found to be payable”. These items included pre- and post-reference costs; reinvestment and disturbance costs; and VAT and statutory interest upon which the acquiring authority had insufficient information to formulate an offer. Consequently, if the offer had been accepted, the reference would have continued to determine whether compensation was payable for those items. The offer was stated to remain open for acceptance “until we notify you otherwise” and was withdrawn immediately after the hearing commenced on 12 April 2021.
Section 4 of the Land Compensation Act 1961 prevails over the UT’s general statutory discretion to award costs. It provides that where the acquiring authority has made an unconditional offer of compensation to the claimant and the sum awarded by the UT does not exceed the sum offered, the UT shall, unless for special reasons it thinks proper not to do so, order the claimant to bear its own costs and to pay the costs of the acquiring authority incurred after the offer was made. The claimant argued that the offer was not an unconditional offer of compensation. The UT was satisfied that section 4 did apply. There was no reason that an acquiring authority ought not to be able to make an offer to settle part only of a claim and rely on section 4 in respect of that part.
The tribunal considered that the withdrawal of the offer on the first day of the hearing was a special reason for not ordering the claimant to pay the acquiring authority’s costs after that date. However, it did not accept the claimant’s submission that it should have its costs after the withdrawal of the offer since it could have secured significantly more in compensation by accepting the offer. The claimant was entitled to its costs up to 10 March 2021 on the indemnity basis, was ordered to pay the acquiring authority’s costs from 11 March to 12 April 2021 on the standard basis and each side bore their own costs after that date.
Louise Clark is a property law consultant and mediator
