Mann and others v Transport for London

Costs – Compensation – Part 1 of Land Compensation Act 1973 – Appellants claiming compensation for depreciation in value of properties following construction of relief road – Tribunal awarding compensation – Appellants seeking costs on indemnity basis – Tribunal awarding cost on standard basis – Whether tribunal erring in awarding costs on standard basis where compensation exceeded offers of settlement before hearing – Appeal dismissed The appellants owned properties close to a relief road constructed by the respondent to relieve congestionon the A23 trunk road. They contended thatthe value of their properties had been depreciated, mainly by noise caused by traffic using the relief road and applied for compensation under Part 1 of the Land Compensation Act 1973. The appellants offered to settle on the basis of 3.25% depreciation but indicated that they would ask for indemnity costs in the event that they beat the offers at trial. In its decision, the Upper Tribunal said it was persuaded that the increases in noise had had a depreciating effect on values, as shown by the limited valuation evidence; and that road noise increased in volume, and changed in character, to a sufficient degree to have a depreciating effect on the market value of the elevated claim properties, in general terms. It determined compensation for a 4% depreciation in value of the claim properties. In its “Costs Addendum”, the tribunal noted that indemnity costs were only awarded in exceptional circumstances. The appellants had failed to satisfy the tribunal that the respondent had acted unreasonably in not accepting the offers. The respondent’s case was not patently hopeless and there was nothing in the respondent’s general conduct of the references which should attract any sort of sanction or mark of disapproval. By asserting their intention to seek costs on the indemnity basis, the appellants were not offering any concession but were purporting to introduce a sanction which the tribunal’s rules and practice directions did not provide for. It was not open to a party to a reference before the tribunal unilaterally to appropriate the much more elaborate carrot and stick regime provided by CPR Part 36. In all the circumstances, the costs should be assessed on the standard basis: [2016] UKUT 0126 (LC) The appellant appealed. Two issues arose: (i) whether the tribunal erred in principle in its approach to the making of an award of costs where a claimant had bettered at trial an offer to settle made by him; and (ii) whether in any event the tribunal was wrong to find that in this case the respondent had not acted “unreasonably” in failing to accept the appellants’ offers to settle. Held: The appeal was dismissed. (1)In an appeal such as this, where the tribunal’s exercise of its discretion in making an award of costs under the relevant Rules and the Practice Directions was challenged, the court should not interfere with the tribunal’s decision unless the approach it had adopted was wrong in some obvious respect. Here it was not. The tribunal’s discretion as to costs was a deliberately broad discretion, exercisable in a wide variety of proceedings. It was governed by the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules2010, as amended by the Tribunal Procedure (Amendment No 3) Rules2013 and amplified by the Upper Tribunal (Lands Chamber) Practice Directions, which did not contain provisions corresponding to those in the self-contained procedure in CPR Part 36, “Offers to Settle”, including the provisions for “Costs consequences following judgment” in CPR 36.17. Rule 10 of the 2010 Rules indicated the circumstances in which the tribunal might make an order for costs. Paragraph 12.4 of the Practice Directions, which dealt specifically with awards of costs being made either on the standard basis or on the indemnity basis, was in very general terms. It did not lay down any fixed principles for making an award of costs on one basis or the other, beyond stating the tribunal would normally award costs on the standard basis but exceptionally the tribunal might award costs on the indemnity basis. The tribunal had directed itself appropriately, in the light of the guidance in para 12.4, that indemnity costs were only awarded in exceptional circumstances. It had regard to the particular circumstances of the case and concentrated on the conduct of the parties. If it had not done so it would have been departing from the guidance in para 12.2 of the Practice Directions. The tribunal was entitled to conclude that this was not a case that fell into the category of the exceptional, and not a case, therefore, in which an award of costs on the indemnity basis would generally be justified. The tribunal was also right to conclude that the appellants were attempting, in effect, to introduce into the procedural regime of the tribunal a procedure equivalent to that in CPR Part 36. The tribunal clearly had in mind that the procedure in CPR Part 36 had not been replicated in the Rules or in the Practice Directions. The fact that the appellants’ offers were made in a form modelled on a Part 36 offer in civil proceedings did not constrain the tribunal to adopt the Part 36 procedure in determining the basis upon which costs should be awarded. Its approach had been appropriate and lawful.  (2) Once it was accepted that the tribunal’s approach was, in principle, appropriate and lawful, it could not be suggested that the outcome should have been different. Having heard the claims and formed its view on the strength of the evidence and submissions on either side, the tribunal was in the best position to judge whether the respondent had conducted itself unreasonably. None of its conclusions on the respondent’s case and conduct could be criticised. They were all within the scope of conclusions it could properly reach. It was entitled to conclude that the respondent’s case was not patently hopeless and had been argued properly, relevant considerations in judging whether the respondent had behaved unreasonably. It was also entitled to conclude that the respondent’s general conduct of the references was not such as to attract any sort of sanction or mark of disapproval. Roger Mallalieu(instructed by Hugh James) appeared for the appellants; Joshua Munro (instructed byTransport for London Legal Services) appeared for the respondent. Eileen O’Grady, barrister Click here to read transcript: Mann and others v Transport for London