London Transport Executive v Pepys

Claim to compensation for injurious affection by construction of Victoria Line fails before Lands Tribunal, but costs awarded to unsuccessful claimant up to date of substantial sealed offer lodged by acquiring authority–Tribunal has general discretion as to such costs, but this must be judicially exercised–No ground shown for ordering authority to pay any part of claimant’s costs in the circumstances–Award set aside This was an appeal by the London Transport Executive from a decision of the Lands Tribunal on June 28 1973 awarding an unsuccessful claimant, Dr Elizabeth Olga Pepys, costs up to the date of a sealed offer lodged by the appellants. The tribunal’s decision was reported at (1973) 227 EG 2068. Mr K Bagnall QC and Mr J Gaunt (instructed by G S M Birch) appeared for the appellants. The respondent did not appear and was not represented. Giving judgment, LORD DENNING said that from 1966 to 1968 a new underground line was being constructed as an extension of the Victoria Line. It went 70 ft below the ground in Islington, passing under Dr Pepys’s property, 33 Gibson Square, which she bought on February 7 1967 for £14,000. The line was opened for public traffic on December 1 1968. London Transport Executive had acquired the necessary easement from the previous owner of 33 Gibson Square on terms which preserved a right to compensation for injurious affection provided a claim was made within two years of the opening, and in September 1970 Dr Pepys’s solicitors put in a claim on the basis that the noise and vibration from trains running underneath had affected the value of the property. About that time, a proposed purchaser, a Mr Matthews, offered as much as £18,000 for the house, subject to contract. But after he had been into it he thought the extra noise was so bad that he declined to take it at that price. Dr Pepys eventually sold the house for £15,850. She said that this loss of £2,150 was due to the injurious affection to the house owing to the noise, and she claimed this amount before the Lands Tribunal. The LTE said that the house had not diminished in value at all, and they declined to pay any compensation. Their opinion was that the noise of the trains was no worse than that of passing lorries and the like. It was fair to say that, according to the evidence, very few people had claimed on account of the railway. Only 10 or 12 claims were received, and only three were still active at the time of the hearing; in other words, most people put up with the noise and made no claim at all. Just before the hearing, the LTE put in a sealed offer of £500, wanting to get rid of the claim. Dr Pepys did not accept that. She went on with the hearing, and lost. The reason seemed to be that she could not prove that the man who eventually bought the house put any less value on it because of the noise and vibration. In other words, there was not sufficient evidence21 to satisfy the tribunal that there had been any diminution in value because of the railway. The actual decision was not challenged, and hardly could be, because it was a point of fact and not a point of law. The Lands Tribunal member, who was not a lawyer, said: ‘. . . no evidence was adduced that the eventual purchase at £16,000 [£15,850 plus £150 for fixtures and fittings] was a price discounted by reason of noise. . . . It is for the claimant to establish that the market value of the subject house has been depreciated by the running of the trains, and this she has failed to do.’  But he then said: ‘Having read the decision in this matter, and having then caused a sealed offer lodged by the acquiring authority to be opened, I find that the claimant had been offered unconditionally an amount of £500; accordingly the acquiring authority will pay the claimant her costs of this reference up to the date of the sealed offer.’  The LTE were upset. They had won the case, and yet they had been ordered to pay the costs up to the date of the offer having been put in. They wrote a letter to the Lands Tribunal asking whether this was a slip. The answer was that the matter was one in the discretion of the tribunal and the decision was not to be altered. The LTE asked for a case to be stated upon the point of law as to costs, and the question was now brought before the court. The first point was whether the tribunal had any discretion as to the costs incurred before the sealed offer. Under section 3 (5) of the Lands Tribunal Act 1949, the tribunal was given a general discretion as to costs, but there was a rule which took away that discretion in cases to which the provisions of section 4 (1), (2) and (3) of the Land Compensation Act 1961 applied. Mr Bagnall had submitted that in these circumstances the tribunal had a discretion as to the costs only after the date of the sealed offer, and none as to the costs before that date. Accordingly a claimant was not entitled to any costs before the sealed offer, even though he or she was awarded a sum of compensation. He (counsel) admitted that that was contrary to the practice of the tribunal, which always was that if the claimant was awarded a sum, but a sum which was less than the sealed offer, the claimant got the costs up to the date of the sealed offer and from that date the authority got them. He (his Lordship) thought that present practice well justified by the statutory provisions. The general discretion given in section 3 (5) of the 1949 Act applied to the costs before the sealed offer. If the claimant did recover a sum, even though less than the sealed offer, it was within the discretion of the tribunal to award the claimant the costs up to that date, because section 4 (1), (2) and (3) dealt only with the costs after the sealed offer and not with those before it. The second point was the way in which the tribunal’s discretion should be exercised in a case like the present where the claimant had failed altogether. In those circumstances it seemed to him (Lord Denning) that the practice of the courts in this country–and tribunals and arbitrators equally–was that if a claimant failed altogether no order was made whereby the successful party was to pay any part of his costs. Of course, the successful party might not be entitled to costs, but he was not, in general, to be ordered to pay those incurred by the claimant. The court had been referred to a number of cases starting with Wootton v Central Land Board [1957] 1 WLR 424 and ending with Knight v Clifton [1971] 1 Ch 700, and from these it appeared that the discretion of the court was usually exercised in this way: that if the plaintiff failed, he had to bear his own costs and often those of the defendant, but that while each side could be ordered to pay us own costs, it was exceedingly rare for a successful defendant to be required to pay the costs of a plaintiff who had failed. This should never be done except for very special reasons, and then the tribunal or arbitrator or whoever it might be that was dealing with the case ought to state those reasons. As Lord Goddard CJ said in Lewis v Haverfordwest Rural District Council [1953] 1 WLR 1486 at 1487, ‘Those words ‘judicially exercised’ are always somewhat difficult to apply, but they mean that the arbitrator must not act capriciously and must, if he is going to exercise his discretion, show a reason connected with the case and one which the court can see is a proper reason.’  It was true that in the case of Hood Investment Co Ltd v Marlow Urban District Council (1963) 15 P & CR 229 Harman LJ said: ‘The President, being appealed to for reasons, wisely gave none, and I think he was entitled to keep his counsel on that matter.’  Although he (his Lordship) was himself sitting in that court, he thought that was erroneous in the sense that if the ordinary exercise of discretion was to be departed from, then in the normal way the reasons for that departure should be stated. There was open an appeal to the Court of Appeal. It might be different in the High Court, from which there was no appeal as to costs except with leave of the judge. But in a case such as this, from the Lands Tribunal, it seemed that if the ordinary exercise of discretion as to costs was to be departed from, then the persons so departing should give their reasons so that the parties, if there was an appeal, should know the reasons which influenced them. In the present case no sufficient reason had been vouchsafed in the letter from the tribunal or in the case stated. No reasons were adduced, and it seemed that none existed, whereby the LTE should have been ordered to pay Dr Pepys’s costs. Her claim had failed altogether. The right course was that the order in that respect should not stand. The only part of the order which should stand was that from the date of the sealed offer being communicated Dr Pepys should pay the costs; though he (Lord Denning) was glad to have heard from counsel that in the special circumstances of the case the LTE did not propose to enforce any order for costs against Dr Pepys. ROSKILL LJ delivered a concurring judgment, and SIR JOHN PENNYCUICK agreed with both the judgments delivered.