The Court of Appeal has rejected a bid to read part 36-type provisions into the costs rules of the Upper Tribunal (Lands Chamber).
In Mann and Ors v Transport for London  EWCA Civ 1520, 16 claimants appealed against the tribunal’s decision to award them costs on the standard basis for their claims under part 1 of the Land Compensation Act 1973 because of the depreciation in the value of their properties resulting from public works conducted by Transport for London (TfL). They were awarded compensation of between £3,000 and £13,000.
The claimants had made two offers to settle – which were open to acceptance for 21 days – and made clear their intention to rely on the offers when it came to costs and that they would seek indemnity costs in the event of beating the offers at trial.
Nonetheless, after the claimants beat their offers at trial, the tribunal made costs orders on the standard basis; TfL was to make a payment on account of costs of £350,000.
The tribunal said it was not open to a party “unilaterally to appropriate the much more elaborate carrot and stick regime provided by CPR part 36”.
Instead, it said the claimant had to show that TfL had acted unreasonably in not accepting the offers. “I am not satisfied that this was the case. TfL’s case was not patently hopeless, and it was argued perfectly properly by Mr Walton. There was, therefore, nothing in TfL’s general conduct of the references which should attract any sort of sanction or mark of disapproval.”
On appeal, the claimants argued that, in a situation like this, absent other relevant factors, justice would commonly require that the claimant was awarded costs on the indemnity basis for the period following the expiry of the relevant offer.
However, giving the Court of Appeal’s ruling, Lord Justice Lindblom said there was no obvious mistake in the tribunal’s approach.
“The tribunal’s discretion as to costs is a deliberately broad discretion, exercisable in a wide variety of proceedings. The rules do not contain provisions corresponding to those in the self-contained procedure in CPR part 36…
“If it had been thought necessary or desirable to import the provisions of CPR part 36 into the rules, or to insert into the procedural framework of the tribunal a more refined code for determining applications for costs where offers to settle have been made by one party or the other before the hearing, this could easily have been done. It was not done – either when the rules were originally made or when they were amended in 2013.”
He noted that, while the tribunal rules provided that a tribunal would usually exercise its costs discretion in accordance with the principles applied in the High Court and county courts, and was framed in terms similar to those of CPR 44.2, they “did not incorporate into the regime for awards of costs in the tribunal the entire procedural scheme for awards of costs in civil proceedings”.
The tribunal rules require the tribunal to have regard to “all the circumstances, including the conduct of the parties… and admissible offers to settle”. They also allow for indemnity costs in exceptional circumstances, without setting criteria to determine if these exist.
Lindblom LJ said the tribunal here took a “sound” approach to determining the basis upon which costs should be awarded.
“The tribunal was right to conclude that the claimants were attempting, in effect, to introduce into the procedural regime of the tribunal a procedure equivalent to that in CPR part 36. The significant point here was not whether the claimants were ‘offering any concession’.
“It was whether they were, as the tribunal said, ‘purporting to introduce a sanction which the tribunal’s rules and practice directions do not provide for’… The fact that the claimants’ offers were made, on both occasions, 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.”
Lindblom LJ also found no reason to overrule the tribunal’s finding that there were no exceptional circumstances here.
“It is not for this court to revisit the tribunal’s exercise of its discretion as to costs by going behind the conclusions it reached, unless those conclusions are demonstrably unsound. In this case, they are not demonstrably unsound.
“Once it is accepted that the tribunal’s approach was, in principle, appropriate and lawful, as in my view it was, I cannot see how it can be suggested that the outcome should have been different.”
Roger Mallalieu (instructed by Hugh James) for the appellants; Joshua Munro (instructed by Transport for London Legal Services) for the respondent.