England and Wales Lands Tribunal

[2000] EWLands LCA_131_1997 (16 March 2000)

LCA/131/1997

LANDS TRIBUNAL ACT 1949

COMPULSORY PURCHASE – Compensation – laying of water main in private land – Water Industry Act 1991 – claim withdrawn – costs – claimant to pay compensating authority's costs of reference in all but preliminary issue (no award) and Order of 8 February 2000 (compensating authority to pay).

IN THE MATTER of a NOTICE of REFERENCE

BETWEEN STUART LILLIS Claimant

and

NORTH WEST WATER LIMITED Compensating

Authority

Re: Park Brook Farm, Bamfurlong, Wigan

Before: P R Francis FRICS

Sitting at: Manchester Combined Tax Tribunal

Warwickgate House, Warwick Road, Manchester, M16 0GP

on

10 March 2000

The following cases are referred to in this decision:

Pepys v London Transport Executive [1975] 1 All ER 748

Mr. Gerald Fairhurst of Arthur Smiths, Solicitors of Wigan for the claimant.

Mr. Timothy Warn, solicitor to North West Water for the compensating authority.


 


DECISION ON COSTS

1. This decision concerns the costs of a reference to determine the compensation payable to Mr. Stuart Lillis ("the claimant") by North West Water Limited ("the compensating authority") under the Water Industry Act 1991 in connection with the laying of a water main in private land. A preliminary issue, as to whether section 9 of the Limitation Act 1980 applied to this reference (the contention of the Company), was decided by Mr. P H Clarke FRICS of this Tribunal on 10 September 1998 in favour of the claimant, and the reference continued to be pursued.
2. On 21 February 2000, two weeks prior to the commencement of the substantive hearing, the claimant advised the compensating authority of its intention to withdraw. The compensating authority indicated its willingness to sign a Consent Order or Withdrawal Notice subject to the claimant agreeing to pay its costs, such costs to be assessed by the Registrar of the Lands Tribunal on default of agreement. The claimant made an application for some of its costs, this resulting in the compensating authority's refusal to agree an Order formally disposing of the matter.
3. The only issue for my determination, therefore, is the question of liability for the costs of this reference.
4. Mr. Gerald Fairhurst, solicitor of Arthur Smiths of Wigan appeared for the claimant, and Mr. Timothy Warn, solicitor to the compensating authority, appeared for North West Water Limited.

Claimant's case

5. Mr. Fairhurst said he was seeking a determination in respect of five heads of costs. Whilst the claimant accepted that he would be liable for a substantial proportion of the Company's costs, there were issues for consideration in respect of :

a) The period from 7 October 1999 to 7 February 2000.

b) The costs of the preliminary issue.

c) The costs thrown away by the adjournment specified in the Order of 12 August 1999, and the costs of that Order.

d) The costs of the Order of 8 February 2000.

e) The costs of this hearing.

6. Firstly, in respect of (a), Mr. Fairhurst said the parties should each bear their own costs for the four month period from 7 October 1999. The reason being that the compensating authority had failed to adhere to the terms of para 4 of the 12 August Order, which stated:

" the Compensating Authority be at liberty to file and serve within 56 days supplementary reports of Gary J Bardill and Lisa Burgin in response to the matters raised in Mr. Woodward's further report of 28 July 1999."

7. The compensating authority had not served those reports until 7 February 2000, whereas the 56 days expired on 7 October 1999. It was the content of one of those reports that, Mr. Fairhurst said, prompted the claimant to make the decision to withdraw his claim. Reference to "borehole 18" which had established there was much more overburden than had originally been thought at one end of the site, making the costs of extracting minerals uneconomic, had came as a shock to the claimant, and, with insufficient time to carry out further investigations of his own, discretion being the better part of valour, he decided to discontinue.
8. Had the compensating authority served its supplemental reports on time, the claimant would have probably have made the decision to withdraw much earlier. Any costs incurred by the compensating authority, as a result of its delay, should not, Mr. Fairhurst said, be laid at the door of the claimant. It was thought that the compensating authority was aware of the implications of borehole 18 in September 1999, and Mr. Fairhurst said the information should have been divulged then. Whilst accepting that the borehole information had been in the public domain since 1992 (through the British Geographical Society), Mr. Fairhurst said it was only by chance that the compensating authority discovered it.
9. Mr. Fairhurst submitted that this Tribunal's powers on costs, as set out in rule.52 of the Lands Tribunal Rules 1996, were similar to the Civil Procedure ("CPR") Rules, and particularly rule 44. The Tribunal had discretion on costs, and under the CPR rules there was an overriding objective to deal with them justly, to save expense, and to consider the amount of money involved and the financial position of the parties.
10. As to (b), the preliminary issue, Mr. Fairhurst said that as the Tribunal had found in favour of the claimant on the limitation issue, costs should follow the event. In respect of Mr. Clarke's comments in his decision to the effect that he considered the claim to be speculative (whilst conceding he had not heard the evidence on the substantive issue), the claimant had taken this seriously, but it was his view that, as the case progressed, and more evidence was adduced, the case had become stronger – until the borehole 18 evidence came to light.
11. Mr. Fairhurst referred to Pepys v London Transport Executive [1975] 1 All ER 748. That case was an appeal to the Court of Appeal from a decision of the Lands Tribunal in which a claimant who had failed to win compensation (and who had also refused a sealed offer) had been awarded her costs by the Tribunal member up to the date of the sealed offer. In allowing the appeal (and thus overturning the costs Order) it was held that the Tribunal did have jurisdiction to order the acquiring authority to pay the pre-offer costs of a claimant who succeeded in getting something less than the offer. The Tribunal's discretion as to pre-offer costs was a judicial discretion and so had to be exercised judicially. Since it was very unusual for a successful party to have to pay the costs of the party who had lost, it should never be done except for very special reasons and when it was done, the Tribunal should state its reasons.
12. It was therefore Mr. Fairhurst's submission that whilst it is extremely rare for a successful defendant to have to pay the costs of a plaintiff who had failed, the Lands Tribunal does have discretion to award costs and the very special reason here was that the preliminary issue was in relation to the question of limitation that had been raised by the compensating authority, and the claimant had won on that point.
13. In respect of (c), the costs of the August 1999 Order, this was accepted by the claimant, and regarding (d) the February 2000 Order, where the compensating authority is to pay the costs, this should also stand. Finally as to this hearing, Mr. Fairhurst said that if I found for the claimant on the issues raised, then I should award him the costs thereof.

Compensating Authority's case

14. Mr. Warn said the claim, at £620,000 – subsequently reduced to £400,000, was not insignificant. It was, and always had been, the compensating authority's view that the claim, the subject of this reference, was entirely unsubstantiated, and that is why it had fought all the way, and had not made an offer. Conversely, the claim for compensation for land taken had been accepted and dealt with expeditiously.
15. As to the claimant's argument that each party should bear its own costs for the period 7 October 1999 to 7 February 2000, whilst the compensating authority accepted that its expert's supplemental reports were submitted late, it was its contention that virtually no costs would have been incurred during that period, and the suggestion that the claimant would have discontinued sooner was not accepted. Mr. Warn said that it was only at a joint meeting of the experts of 22 July 1999 that the compensating authority became aware of Mr. Woodward's intention to produce a supplementary report, subsequently served on 28 July 1999 – hence the adjournment allowed in the August Order, to give time for the compensating authority's experts to file supplemental reports. One of the reasons for the late submissions of those reports was that copies of some of the documents referred to in Mr. Woodward's report, that had been requested by the compensating authority, were not forthcoming until 2 November 1999. In reply, Mr. Fairhurst said that was no excuse, and the clock did not stop ticking just because some further information was required.
16. Mr. Warn did not know exactly when the borehole 18 information had become available, but in any event it was not encumbent upon the compensating authority to "drip feed" information. It was not accepted that the information relating to the borehole was the "magical or earth shattering" revelation that caused the claimant to withdraw. Even if it was, it would be disingenuous for the compensating authority to be condemned for having produced information which, if the claimant had seriously been intending to carry out mining activities, he should have taken steps to acquire himself very much earlier. Indeed, Mr. Warn said there had been correspondence relating to boreholes in 1998, and Mr. Trepass, one of the claimant's experts, had said in a letter to the compensating authority of 4 November 1998:

" My view is clearly that the mining evidence we hold, that of the British Coal Authority, is more substantial than could ever be achieved by boreholes….."

17. Furthermore, in his supplemental report of February 2000, Mr. Bardill had said, under a sub-heading "Method adopted for calculating coal thicknesses and quantities"at p 27:

"The preferred method of determining coal thicknesses and recoverable reserves is to carry out a borehole survey of the proposed working area. From existing geological information, opencast coal operators are usually able to create a broad outline of the area which is most likely to contain coal which is economic to extract. From this, the operator would then carry out a borehole survey in order to confirm the following:

1. The presence of each coal seam;

2. The thickness of each coal seam;

3. The depth of overburden which overlies each seam;

4. The quality of coal within each seam.

The information available at the subject site would enable an operator to create a broad outline of the area which could contain economically viable reserves, and which would be included within a borehole survey. The available information only confirms the presence of the coal seams within the area immediately surrounding the Bamfurlong Colliery shafts. It does not prove the existence of the coal seams within the remaining working area contained within Mr. Lillis's claim. For this reason, this information would not enable the quantity, quality and position of recoverable reserves to be proven. Therefore, I should point out that an assessment of coal quantities, quality and position from the limited information available without a borehole survey could not be relied upon by an operator. Nevertheless, I have carried out an assessment of coal thicknesses, quantities and position as a check on the figures within Mr. Lillis's claim"

18. This proved, Mr. Warn said, that it was risky in the extreme for the claimant to rely on old British Coal Authority records in seeking to establish what coal was there and whether it was economic to mine. Add to this the dilatory way in which the claimant had pursued this claim, the speculative nature of it (as strongly referred to in Mr. Clarke's decision on the preliminary issue), and the fact that the actual claim was not quantified for some five years, makes the suggestion that it was solely the information in the compensating authority's supplemental reports that was the reason for the withdrawal of the claim, all the harder to swallow. Mr. Warn said that following the decision on the preliminary issue the compensating authority had made attempts to bring the matter to an end, by suggesting proposals for discontinuance, but no positive response had been received. It is only now, some 16 months later, that the claimant is offering to withdraw, and it would be incongruous for the compensating authority to be held responsible for any of the costs.
19. In connection with the claimant's application for the costs of the preliminary issue, Mr. Warn referred to the fact that Mr. Clarke had reserved costs, rather than, as he could have done, award them to the claimant. He pointed out Rule 44 of the CPR rules, and the definition of "Costs reserved" in the Practice Directions thereto, vis: "The decision about costs is deferred to a later occasion, but if no later order is made the costs will be costs in the case." He said that bearing in mind the member's comments relating to the speculative nature of the claim, and the suggestion that the claimant "look again at it with his advisers with a view to settlement", and that the claimant had failed to heed that advice, I should find for the compensating authority. It was Mr. Warn's view that the reason Mr. Clarke reserved costs was to allow the flexibility for him to award them against the claimant in the event that the substantive claim failed. This aspect was strongly disputed by Mr. Fairhurst.
20. As to Pepys, Mr. Warn said the circumstances in that case were different to the instant case, but in any event, the Court of Appeal decision actually supports the compensating authority's submissions to this hearing.
21. Mr. Warn referred to the principles of assessing costs under Rule 52 of the Lands Tribunal Rules 1996, Order 62 of the High Court Rules and Rule 44 of the CPR Rules. There were no exceptional circumstances in this case, as suggested by the claimant, which would allow me the discretion to award costs, even in part, to the claimant, and all the principles suggest that, in a case such as this where the respondent has been wholly successful (as evidenced by the claimant's total withdrawal), costs should follow the event (except in respect of the February 2000 Order, where the liability was accepted). This principle, in respect of discontinuance, was clearly set out in Order 62 Rule 5(3) which states:

" Where a party by notice in writing and without leave discontinues an action or counterclaim or withdraws any particular claim made by him as against any other party, that other party shall be entitled to his costs of the action or counterclaim or his costs occasioned by the claim withdrawn, as the case may be, incurred to the time of receipt of the notice of discontinuance or withdrawal".

22. As to this hearing, Mr. Warn pointed out that the compensating authority had attempted to secure a consent order, but the claimant had failed to agree to bear its costs. Thus, it was only because the claimant was seeking some costs that this hearing was necessary, and unless I find in the claimant's favour, the compensating authority is entitled to its costs.

Decision.

23. Both parties referred to the Civil Procedure Rules, Part 44 of which provides the Tribunal with discretion on costs and guidelines for exercising that discretion. Technically these rules do not apply to proceedings in this Tribunal, but only to those in the County Courts, the High Court and the Civil Division of the Court of Appeal. The relevant provision in this case is rule 52(1) of the Lands Tribunal Rules 1996, which reads as follows:

"Subject to the provisions of section 4 of the 1961 Act and rule 28(11), the costs of and incidental to any proceedings shall be at the discretion of the Tribunal."

24. The reference to s4 of the Land Compensation Act 1961 relates to the basis upon which costs should be awarded in proceedings determining the amount of compensation payable on compulsory acquisition, where either there has been an unconditional offer to pay or accept a sum in compensation, or the claimant has failed to deliver a sufficiently detailed notice in writing of the amount claimed by him, in time for the acquiring authority to make a proper offer. Rule 28(11) of the Lands Tribunal Rules 1996 relates to the award of costs in proceedings to which the simplified procedure applies.
25. The effect of rule 52(1), therefore, is that the costs of this reference are entirely at the discretion of this Tribunal. Nevertheless, in exercising that discretion, I consider that it is helpful for me to bear in mind the guidelines contained in part 44 of the Civil Procedure Rules. These state that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including the conduct of the parties, whether a party has succeeded on part of his case, even if he has not been wholly successful and any payment into court or admissible offer to settle made by a party which is drawn to the court's attention.
26. Applying these guidelines to this reference, the starting point is that the compensating authority has been wholly successful in the substantive issue (by reference to the claimant's withdrawal), and the claimant has been unsuccessful. The general rule is, therefore, that the claimant should pay the compensating authority's costs. However, there is the preliminary issue to consider, and the fact that, on the issue of limitation, the claimant was successful.
27. I therefore deal now with the preliminary issue. There is no doubt in my mind that, despite the fact I have not heard all the evidence in the substantive issue, Mr. Clarke's comments were well founded and the claimant had the opportunity to withdraw (which he eventually did) very much sooner. As pointed out by Mr. Warn, and as set out above, in principle, in a case that is discontinued, the compensating authority is entitled to all its costs. However, the compensating authority sought to have the limitation issue determined as a preliminary issue, and, as I have said, on this aspect the claimant was successful. In considering this aspect of the claim, I am also assisted by their Lordships in Pepys who held that the costs of a party who had lost should never be awarded save for very special reasons, (my emphasis) even though this Tribunal has the jurisdiction and the discretion to do so. I do not think, bearing in mind the overall conduct of this case, that those very special reasons exist. However, I consider that under all the circumstances, the appropriate course is to determine that there should be no order as to costs of the preliminary hearing.
28. I consider next the period between 7 October 1999 and 7 February 2000, where the claimant seeks, somewhat surprisingly, a determination that each party should bear its own costs. The suggestion that the compensating authority's lateness in filing its supplementary reports prevented the claimant withdrawing earlier, is, in my judgment, unrealistic. The complaint about the compensating authority's failure to meet the deadline set in the August 1999 Order is all the more surprising, in the overall scheme of things, considering the dilatory way in which this reference, as a whole, has been pursued by the claimant. I accept Mr. Warn's submissions in respect of the boreholes, and the fact that the claimant had not undertaken the basic research that Mr. Bardill said, in the section of his supplementary report reproduced at 16 above, any prospective operator would do. Perhaps if it had done so, the claimant would have considered his position at a much earlier stage.
29. I thus determine that the claimant shall pay the compensating authority's costs of this reference (including this hearing) except for those matters relating to the preliminary issue, in respect of which I make no order as to costs, and the Order of 8 February 2000, where the compensating authority shall pay the claimant's costs.
30. The costs to be agreed, and if not so agreed, to be the subject of a detailed assessment on the standard basis by the Registrar of the Lands Tribunal in accordance with rules 44.4 and 44.7 of the Civil Procedure Rules. The procedure laid down in rule 52 of the Lands Tribunal Rules 1996 will apply to such detailed assessment.

DATED:

(Signed) P R Francis FRICS