England and Wales Lands Tribunal

[2003] EWLands ACQ_124_2001 (05 August 2003)

ACQ/124/2001

LANDS TRIBUNAL ACT 1949

PRACTICE – compensation for compulsory acquisition – failure by claimants to comply with peremptory order – whether sufficient reason given – whether claimants have pursued reference with due diligence – effect on hearing date – prejudice to TfL – claimants debarred from proceeding with claims except goodwill – whether order proportionate and in pursuit of a legitimate aim – Lands Tribunal Rules 1996, r 46(2)

IN THE MATTER of a NOTICE of REFERENCE

BETWEEN WORLD CLASS GIFTS LIMITED Claimants

and

TRANSPORT FOR LONDON Acquiring

Authority

Re: Showroom, offices and warehouse,

Lanrick Road,

Poplar E14

Before: P H Clarke FRICS

Sitting at 48/49 Chancery Lane, London WC2A 1JR

on 1 July 2003

The following cases are referred to in this decision:

Hytee Information Systems Limited v Coventry City Council [1997] 1 WLR 1666

Biguzzi v Rank Leisure plc [1999] 1 WLR 1926

Tinnelly and Sons Limited v United Kingdom (1999) 27 EHRR 249; [1998] ECHR 20390/92

UCB Corporate Services Limited v Halifax (SW) Limited (1999) (unreported)

Rees-Davies (Personal Representatives of Rees-Davies, deceased) v Westminster City Council (1997) (unreported, LRA/18/94) LT; [1998] 38 RVR 219, CA

Arbuthnot Latham Bank Limited v Trafalgar Holdings Limited [1998] 1 WLR 1426

Stubbings v United Kingdom (1996) Reports 1996 – IV 1502

Mr Tim Cowen instructed by Kosky Seal, solicitors, for the claimants

Mr David Forsdick instructed by Solicitor and Head of Legal Services for the acquiring authority


 


INTERLOCUTORY DECISION OF THE LANDS TRIBUNAL

1. This is an interlocutory decision under rule 46(2) of the Lands Tribunal Rules 1996 debarring claimants seeking compensation for compulsory purchase from adducing evidence or making submissions in support of certain heads of claim.

Facts

2. The claimants were tenants of a showroom and office building and an adjoining warehouse in Lanrick Road, Poplar E14. Part of the property was a yard and forecourt used for loading. The claimants occupied the premises (other than the first floor) for their business of importing china and furniture for distribution and sale, wholesale or retail.
3. The Secretary of State for the Environment, Transport and the Regions made The A13 Trunk Road (Ironbridge to Canning Town Improvement) Compulsory Purchase Order (No.PS 13) 1998. Plots 23F and 24 in that order are part of a private access and part of a forecourt and half the width of Lanrick Road both occupied by the claimants. Notices to treat were served on 27 January 1999 and notices of entry on 10 October 2000. The acquiring authority are now Transport for London ("TfL"). There is disagreement regarding the date of entry, 27 November 2000 or 27 February 2001. On 26 February 1999 a claim was made in answer to the notices to treat, the particulars of claim "to be advised on assessing the impact of the scheme."
4. On 2 November 2001 Mr R Cobb of G L Hearn, property consultants, referred the determination of compensation to this Tribunal on behalf of the claimants. The notice of reference indicated an intention to call two or more expert witnesses.
5. On 12 December 2001 the Registrar wrote to the parties requiring expert reports by 9 January 2002. Applications were then made by TfL for extensions of time on 21 December 2001, 11 February, 26 March, 25 April and 23 July 2002. They were not opposed by the claimants although on 28 December 2001 Mr Cobb wrote to TfL that there should be "no unreasonable delay in the resolution of this dispute". These applications were granted by the Registrar, extending the time for lodging expert reports to 30 September 2002. TfL's application dated 23 July 2002 also required the claimants to produce audited accounts for 1998-2000. These were ordered to be provided by 30 August. On 30 September 2002 TfL lodged expert reports for Mr Moore and Mr Lemar.
6. On 2 October 2002 Mr Cobb informed the Tribunal that Kosky Seal, solicitors, had been appointed to act for the claimants. On 12 December 2002 Kosky Seal applied for an extension of time to 10 January 2003 to lodge expert reports. This was granted on 19 December with a covering letter stating that further extensions of time will only be granted in exceptional circumstances. The Tribunal received an expert report from Mr Cobb (for the claimants) on 14 January 2003. This included the statement that the value of the claimants' business is "to be assessed by a specialist and evidence in support … will be provided by an expert in this field." A letter to the Tribunal from Kosky Seal dated 24 February 2003 stated that if necessary an application would be made for an additional expert.
7. On 25 March 2003 I was selected by the President to hear and determine this reference. I reviewed the file and concluded that it was not ready for hearing. I fixed a pre-trial review for 22 April 2003. On 3 April a report by Mr N Langley dealing with loss of goodwill was lodged by Kosky Seal without application to lodge out of time.
8. On 22 April 2003 I held a pre-trial review. The claimants were represented by Mr A Bates of Kosky Seal and TfL by Mr David Forsdick of counsel. Following the hearing I issued directions dated 22 April giving leave on terms of costs for the late admission of Mr Langley's report and requiring the claimants to complete their evidence for all heads of claim with witness statements, supplementary reports for Mr Cobb and Mr Langley and all supporting documents and explanations. This was a peremptory order. If the claimants should fail to comply with these directions they would be required to show cause why they should not be debarred from taking any further part in the proceedings. The date for compliance was 20 May 2003. The supplementary report of Mr Langley was to include an explanation of an error in the accounts and the steps taken to check all other lines. Other directions dealt with supplementary reports by TfL, a statement of agreed facts and trial bundle, skeleton arguments, hearing dates and costs.
9. On 9 May the substantive hearing was fixed for 24-26 September 2003. The claimants lodged with the Tribunal on 20 May a ring binder containing a witness statement by Mr C Defeo, a director of the claimant company, and various documents. These latter did not appear to satisfy the peremptory order. TfL wrote to the Tribunal drawing attention to the claimants' failure to comply with the order. On 5 June I fixed a hearing for the claimants to show cause why they should not be debarred from taking any further steps in the proceedings. The hearing date was 1 July 2003. Skeleton arguments were ordered. On 27 June Kosky Seal lodged supplementary reports by Mr Cobb and Mr Langley without application to lodge out of time or any explanation for the delay.
10. On 1 July 2003 I held the hearing to show cause. The claimants were represented by Mr Tim Cowen of counsel and TfL by Mr David Forsdick of counsel. At the conclusion I gave leave for the late admission of the supplementary reports of Mr Langley and Mr Cobb (on terms of costs), refused leave for a further witness statement by Mr Defeo and further reports from Mr Langley and Mr Cobb, debarred the claimants from adducing evidence or making submissions on all heads of claim except loss of goodwill and ordered the claimants to pay TfL's costs of the hearing on an indemnity basis. These decisions were confirmed by an order dated 3 July. My reasons are set out below.

Claimants' case

11. Mr Cowen said that he accepted that the claimants had not wholly complied with the peremptory order by the due date. The order is not, however, clear as to what is required. Almost the whole of the order was complied with on 20 May and there has now been full compliance. It would be a denial of the claimants' rights of access to justice to debar them from participating in the proceedings. Mr Cowen said that the claimants apologise for the defects in their compliance but they are minor and can be explained. Mr Cobb did not have anything substantive to add to his first report and it was difficult for him to work out what was to be included in his supplementary report. He expected to be able to comment on TfL's expert reports with simultaneous exchange. Mr Langley was ordered to explain an error in the accounts and did so in a letter served on 20 May 2003. There is no doubt that he is the author of a letter dated 15 May to Kosky Seal. (This letter was subsequently found to have been omitted from the documents lodged by the claimants on 20 May. It deals with stock loss value, although I believe it is intended to be an explanation of the error in the accounts). Mr Cowen said that Mr Langley has now confirmed and expanded that letter in his supplementary report. He accepted that Mr Langley did not adequately explain his checks on the accounts but this oversight was due to a hiatus in communication between Kosky Seal and Mr Langley. He has now complied with the order in his supplementary report.
12. There has now been full compliance with the peremptory order. The provision of insufficient evidence to support a claim is a separate matter from failure to comply with an order to provide further evidence. The former does not constitute non-compliance. It is for the claimants to decide how they will support their claim. A period of 14 days is all that is needed to provide further supporting evidence. No prejudice would be suffered by TfL or the Tribunal having regard to the hearing date in September 2003. An extension of time is sought for the late admission of the supplementary reports.
13. As to disclosure of documents, Mr Cowen referred to a letter dated 7 May 2003 from TfL to Kosky Seal containing a list of documents and said that TfL have confused the order regarding documents with an order for disclosure. The Tribunal did not make an order for disclosure. It is for the claimants to decide what documents they wish to rely on. Disclosure of specific documents is a separate matter and failure to comply with that letter does not constitute non-compliance with the Tribunal's order.
14. A debarring order would be a disproportionate penalty. Rule 46(2) of the Lands Tribunal Rules 1996 contains three courses of action and debarring is the most extreme option. Only two are sanctions, the rest are designed to expedite the hearing. The purpose and spirit of this rule is to get cases heard expeditiously. Rule 46(2) is concerned with fundamental breaches of the Rules, not with non-compliance with an order. It is only in the case of a recalcitrant litigant that the ultimate sanction of debarring should be applied.
15. The approach of the courts under CPR Part 3.4(2) is a useful guide. Mr Forsdick relies on the decision in Hytec Information Systems Limited v Coventry City Council [1997] 1 WLR 1666, but judicial authority has moved on, having regard to the CPR and the Human Rights Act 1998. The new approach to sanctions is contained in the judgment of Lord Woolf MR in Biguzzi v Rank Leisure plc [1999] 1 WLR 1926, at 1932 B-E, F-G, H, 1933 and 1934G. This approach stresses alternative sanctions to striking out, e.g. costs. Pre-CPR authorities should not be considered. Mr Cowen referred to article 6 of the European Convention for the Protection of Human Rights and the decision in Tinnelly and Sons Limited v United Kingdom (1999) 27 EHRR 249 at 271 (para 72). A sanction must pursue a legitimate aim; there must be proportionality between the means employed and the aim sought to be achieved. This decision does not deprive a court of the power to strike out but that action must be proportionate and for a legitimate aim.
16. Mr Cowen submitted that I should be guided by the criteria set out in CPR Part 3.9. The following matters should be taken into consideration when exercising my discretion as to sanctions. The claimants complied with most of the order by the due date and there has now been full compliance. The non-compliance was not intentional and was due to confusion as to how to comply with the order and to communication problems. Mr Cobb did not know what was expected of him and it is still not known whether his supplementary report is satisfactory. Any failure to comply with the order is not the fault of the claimants but their advisers. The late service of the supplementary reports does not affect the hearing date or preparation by either side and does not prejudice TfL. Debarring the claimants from bringing their claim for £750,000, which is now ready for hearing (save perhaps for an order as to how the claimants' documents are to be presented at the hearing), would be a grossly disproportionate denial of access to justice.
17. At the close of his submissions I went through the heads of claim in Mr Cobb's first report with Mr Cowen to ascertain the present position. The loss of goodwill claim will rest on the two reports by Mr Langley. All other claims will require further evidence. Mr Cowen said that Mr Defeo would deal with all other heads of claim supported by further evidence from Mr Langley on the value of stock and accountancy fees and from Mr Cobb on surveyor's fees. Mr Cowen accepted that a further witness statement from Mr Defeo and additional reports from Mr Langley and Mr Cobb would be required. These could be provided in 14 days. If TfL wished to put further questions to the claimants for clarification this could be done with further time for both side's reports to be lodged before the September hearing.

TfL's case

18. Mr Forsdick said that the part of the peremptory order dealing with witness statements has now been complied with and no comment is made on the adequacy of Mr Defeo's evidence. The remainder of the order has not been complied with: the whole of the claimants' case has not been set out, as required. The errors in the accounts have not been adequately explained. Although Mr Langley has now provided two reports the claim for loss of goodwill is still not adequately explained. TfL are unable to respond and, if the reference proceeds to a hearing, there is a danger that the claimants' case will emerge in cross-examination to the disadvantage of TfL. Mr Forsdick, however, accepted that, notwithstanding the lack of explanation by the claimants of their goodwill claim, it would be possible for TfL's accountancy witness (Mr Lemar) to calculate a figure for goodwill on the basis of the accounts and documents now in evidence.
19. TfL gave the claimants' solicitors a list of documents which they believed were the sort of documents required to fulfil the requirements of para 3 of the peremptory order. Some were delivered on 21 May 2003 but there are substantial omissions without adequate explanation. They do not meet the requirements of para 3 of the order. In their letter to TfL dated 19 June Kosky Seal said that the claimants do not intend to supply any further documents.
20. The claimants are now required to show cause why they should not be debarred from pursuing their claim. The principles to be applied were considered in Hytec at 1674 H. This decision has not been reversed (see UCB Corporate Services Limited v Halifax (SW) Limited (1999) (unreported) para 23) and has been subsequently applied in 11 cases. It is still the starting point for consideration of an application to debar. The failure by the claimants to comply with the peremptory order without good reason amounts to an abuse of process (see UCB at paras 6 and 9). The Tribunal should follow the principles used by the courts under CPR 3.4(2).
21. The claimants were represented by a solicitor at the pre-trial review and knew what was required to comply with the subsequent order. There are clear breaches of the order. The claimants have repeatedly ignored requests and orders from the Tribunal to provide expert reports and documents which contain the whole of their claim. The claimants have provided no explanation for their failure to comply with paras 2-4 of the order of 22 April 2003 which are on a peremptory basis (see Rees-Davies (Personal Representatives of Rees-Davies,(deceased) v Westminster City Council [1998] 38 RVR 219, which also shows that past behaviour can be taken into account when deciding whether a party should be debarred). TfL ask the Tribunal to debar the claimants from taking any further part in the proceedings. If the Tribunal considers that the claimants have given an adequate explanation for non-compliance with the peremptory order then further directions must be given with strict time limits and TfL should be protected in costs. There are three options for the Tribunal: to debar the claimants now from proceeding with their claim; to give further directions with protection for TfL in costs; to accept the existing inadequate evidence as the claimants' case and strike out the claim at the hearing for lack of proof.

Decision

22. I now give my reasons for debarring the claimants from proceeding with their claims for disturbance in this reference other than for loss of goodwill. I refer at the outset to three matters which, in my judgment, form the general background to this dispute.
23. The first is the necessity for owners whose land has been compulsorily acquired to send an early and adequate claim to the acquiring authority. This requirement is well-established. (see Lands Clauses Consolidation Act 1845, sections 18 and 21). These provisions have been carried forward into the Compulsory Purchase Act 1965. Section 5 requires the acquiring authority to serve notice to treat and to demand particulars of the claimant's interest and his claim. Section 6 allows reference to be made to the Lands Tribunal where particulars of claim have not been stated within 21 days or the claimant has failed to treat with the authority or compensation cannot be agreed. The importance of an adequate claim is seen in the provisions for costs in section 4 of the Land Compensation Act 1961. Where written notice of claim has not been delivered to the acquiring authority in time to enable them to make a proper offer of compensation, the Tribunal may order the claimant to pay the authority's costs of the reference from the date when the claim should have been delivered (subsection (1)(b)). The notice of claim is required to give details of the compensation claimed, distinguishing the amounts under separate heads and showing how the amount claimed under each head is calculated (subsection (2)). A claimant can only recover his costs in circumstances where he has made an offer to settle which has been equalled or exceeded by the Tribunal's award if an adequate notice of claim has been made (subsection (3)). Rule 42 of the Lands Tribunal Rules 1996, which requires the early exchange of expert reports, is drafted on the assumption that a claim has been made in sufficient detail to enable the authority to respond to it by expert evidence. Unfortunately, as in this case, claimants are often dilatory in lodging their claims with consequent delays and confusion later in the proceedings.
24. The second background matter is that it is for the claimant to prove his claim for compensation. This is particularly relevant where the claim is for disturbance, the personal loss imposed on an owner by the forced sale. This loss, the way in which it has been calculated and the supporting documents and evidence are wholly within the claimant's knowledge and possession and must be disclosed to the authority at the start of the negotiations or reference. It is impossible for an authority to prepare an estimate of disturbance compensation or respond to an inadequate claim without full explanation and supporting documents. In particular, it is impossible for an authority to make an offer and therefore lack of an adequate and early claim will hinder an early settlement.
25. The third matter is that it is the practice of the Tribunal to require parties to exchange and lodge their evidence in the form of expert reports and witness statements, with full explanations and supporting documents, well before the hearing. This is to encourage settlements, to avoid either party being taken by surprise at the hearing, to reduce the length of hearings and to enable the Tribunal to understand the issues and prepare for the hearing. Hearings where there has been adequate disclosure are more efficient and shorter than would otherwise be the case, with consequent saving in costs. The Tribunal will not allow parties to reveal their evidence for the first time at the hearing.
26. Against this general background I look first at the law and then at the issues. The power of the Tribunal to make a debarring or similar order is contained in rule 46(2) of the Lands Tribunal Rules 1996 (as amended):-

"Where a party has failed to pursue any proceedings with due diligence or has failed to comply with any of the provisions of these Rules, the registrar or the Tribunal, on the application of any party or of his or its own motion, after giving the parties an opportunity to be heard may make –

(a) an order that the proceedings be heard by the Tribunal; or

(b) an order that the proceedings be dismissed or that any party be debarred from taking any further part in the proceedings; or

(c) Such other order as may be appropriate for expediting or disposing of the proceedings including an order for costs."

It is not disputed that I am able to make the debarring order which I have made. I have a discretion to make such an order which must be exercised judicially. Under rule 46(2) one or both of two conditions must be satisfied before an order may be made. These are that a party has failed to pursue any proceedings with due diligence or has failed to comply with any provisions of the Rules, which I take to include directions given under the Rules (see Rees-Davies (1997) (unreported LRA/18/94) at 9 line 21 (LT)).

27. I have been referred to four authorities. Hytec was an action for moneys due under a contract for the supply and maintenance of computer software. The defendant council, by its defence and counterclaim, sought recovery of part payment of the price. They then failed to comply with unless orders to supply further particulars of the counterclaim. An appeal against an order striking out the defendants' pleadings, on the grounds that particulars of defence and counterclaim had not been properly served and that the defendants had deliberately flouted the court's order, was dismissed. Ward LJ (with whom Auld LJ and Lord Woolf MR agreed) reviewed the authorities and gave the following general guidance (relied upon by Mr Forsdick) at 1674G – 1675B:-

"In the light of my observations that each case really should be cited upon its own facts, it may be otiose to try and encapsulate what I understand to be the philosophy underlying this approach. It seems to me it is as follows. (1) An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party's last chance to put his case in order. (2) Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed. (3) This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure. (4) It seems axiomatic that if a party intentionally or deliberately (if the synonym is preferred) flouts the order then he can expect no mercy. (5) A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order. (6) The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice. (7) The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weighs very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two."

Later he said (at 1675H):-

"Ordinarily this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: first, if any one is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent … were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself."

Auld LJ emphasised that it is not necessary for there to be an intentional flouting of an order before a sanction arose, although this may be the most usual circumstance giving rise to it. Failure to comply through negligence, incompetence or sheer indolence could equally qualify (at 1677 G-H).

28. Mr Cowen relies on the decision in Biguzzi which he says sets out a new approach to sanctions under the CPR. It shows that the law has moved on since Hytec. The decision in Biguzzi concerned a claim by an employee for damages for personal injury and breach of contract. There were numerous procedural omissions by the claimant and the claims were struck out by the deputy district judge on the grounds that they amounted to a wholesale abuse of process. This decision was made before the CPR came into force. The appeal to a judge was heard after the commencement of the CPR. He allowed the appeal on the grounds that there was nothing unfair in letting the case go to trial and that, in view of the delay, it should be heard promptly. The Court of Appeal dismissed an appeal against this decision. Lord Woolf MR emphasised that the position is fundamentally different under the CPR because the powers of the court are much broader than they were under the old rules (see 1932E and 1933B). He said (at 1933D):-

"There are alternative powers which the courts have which they can exercise to make it clear that the courts will not tolerate delays other than striking out cases. In a great many situations those other powers will be the appropriate ones to adopt because they produce a more just result. In considering whether a result is just, the courts are not confined to considering the relative positions of the parties. They have to take into account the effect of what has happened on the administration of justice generally. That involves taking into account the effect of the court's ability to hear other cases if such defaults are allowed to occur. It will also involve taking into account the need for the courts to show by their conduct that they will not tolerate the parties not complying with dates for the reasons I have indicated."

With regard to decisions under previous rules he said (at 1934G):-

"In relation to the decision of the judge which is under appeal, I can see no failure on his part to recognise the relevant principles. He took the right course as to the previous authorities. The whole purpose of making the CPR a self-contained code was to send the message which now generally applies. Earlier authorities are no longer generally of any relevance once the CPR applies."

29. To counter Mr Cowen's argument based on Biguzzi, Mr Forsdick referred to the decision in UCB Corporate Services Limited. This was an appeal against the striking out of an action for breach of contract or negligence on the grounds that the continuation of the action would be an abuse of process in view of the wholesale disregard by the claimants of the rules and orders of the court. The appeal was dismissed. It was argued on behalf of the claimants that reliance on earlier decisions was incorrect having regard to Biguzzi. This was rejected. Lord Lloyd said (para 17):-

"It would indeed be ironic if as a result of the new rules coming into force, and the judgment of this court in the Biguzzi case, judges were required to treat cases of delay with greater leniency than they would have done under the old procedure. I feel sure that that cannot have been the intention of the Master of the Rolls in giving judgment in the Biguzzi case. What he was concerned to point out was that there are now additional powers which the court may and should use in the less serious cases. But in the more serious cases, striking out remains the appropriate remedy where that is what justice requires."

And Ward LJ said (paras 23-24):-

[Counsel for the appellant claimants] "suggests that the Biguzzi is some landmark decision which throws all of the previous law on its head, though he does not put it as inelegantly as that. That, however, is not how I read that judgment. When the Master of the Roll said at page 1934G-H:

'Earlier authorities are no longer generally of any relevance once the CPR applies,'

he was not saying that the underlying thought processes that informed those judgments, especially those such as Arbuthnot, which were written mindful of the way the new wind was blowing, should be completely thrown overboard."

30. The decision in Tinnelly was a decision of the European Court of Human Rights on article 6(1) of the European Convention on Human Rights (the right to a fair trial). It concerned the award, and subsequent cancellation, of a building contract by the Northern Ireland Electricity Service and a consequent claim for religious discrimination. The applicants complained that they had suffered a violation of article 6(1) because they had been denied access to a court or tribunal to determine their claim that they had been unlawfully refused public works contracts. Mr Cowen relies on the following part of the decision (para 72):-

"The Court recalls that Article 6(1) embodies the 'right to a court', of which the right of access, that is, the right to institute proceedings before a court in civil matters, constitutes one aspect.

However, this right is not absolute, but may be subject to limitations; these are permitted by implication since the right of access by its very nature calls for regulation by the State. In this respect, the Contracting States enjoy a certain margin of appreciation, although the final decision as to the observance of the Convention's requirements rests with the Court. It must be satisfied that the limitations applies do not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Furthermore, a limitation will not be compatible with Article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved (see, among other authorities, the Stubbings and Others v United Kingdom judgment of 22 October 1996, Reports 1996 – IV p1502, para 50)"

31. Both counsel referred to the CPR, considered in the Biguzzi and UCB decisions. Procedure in this Tribunal is, however, governed by the Lands Tribunal Rules, not the CPR. I do not find a detailed consideration of the latter helpful. Although, as stated in para 2 of the Lands Tribunal Practice Directions, the Tribunal will have regard to the overriding objective of the CPR and they are of assistance in indicating matters properly to be taken into account when exercising a discretion under the Lands Tribunal Rules, I do not think that I should go further and apply the specific provisions of the CPR as if they applied to procedure in this Tribunal. General guidance by the courts as to matters such as debarring or striking out is, I suggest, more helpful than decisions as to how specific provisions of the CPR should be applied.
32. Having regard to the general background discussed earlier, the provisions of rule 46(2) of the Lands Tribunal Rules 1996 and the authorities to which I have been referred, it seems to me that the following questions arise as to the exercise of my discretion in this case. First, did the claimants comply with the peremptory order of 22 April 2003 by the due date? If not have they now complied with it? Second, if they have not complied with the order, has sufficient reason been given for their failure to comply? Third, have the claimants failed to pursue the proceedings in this reference with due diligence? Fourth, if the claimants have failed to comply with the peremptory order, does this affect the September hearing date or prejudice TfL in the resolution of the claim? Fifth, if the claimants have failed to comply with the peremptory order without good reason and/or have failed to pursue the proceedings with due diligence, is a debarring order, in relation to the whole or part of the claim, proportionate and in pursuit of a legitimate aim?
33. I look first at the question of compliance. The claimants' primary case is that they complied with the peremptory order, if not on the due date of 20 May 2003 then on 27 June when the supplementary reports of Mr Cobb and Mr Langley were lodged with the Tribunal.
34. The material parts of the order of 22 April 2003 are as follows:-

"2. Not later than 20 May 2003 the claimant shall serve on the acquiring authority and lodge with the Tribunal a witness statement for each witness of fact to be called to the hearing and supplementary expert reports for Mr R W Cobb and Mr N Langley. This is a peremptory order. Unless the claimant complies with this direction it shall be required to show cause why it should not be debarred from taking any further part in the proceedings under rule 46(2)(b) of the Lands Tribunal Rules 1996.

3. The witness statements and expert reports referred to in the preceding paragraph shall contain the whole of the claimant's claim, including all supporting documents and explanations. No further evidence will be admitted without leave of the Tribunal.

4. The supplementary expert report of Mr Langley referred to in paragraph 2 above shall contain a full explanation as to how an error arose in the accounts and state what steps have been taken to check all other lines in the accounts."

The reason for these parts of the order was the inadequacy of the claimants' case at the time of the pre-trial review. It then rested on limited expert reports by Mr Cobb and Mr Langley. Mr Cobb's report is little more than heads of claim with the minimum of explanation and support. Furthermore, it emerged at the cause hearing on 1 July 2003 that Mr Cobb will not be the witness to support the heads of claim set out in his report, except perhaps surveyor's fees. Mr Langley's initial report was submitted late and deals only briefly with loss of goodwill. Like Mr Cobb's report it is little more than a claim, not an expert report. At the time of the pre-trial review there was therefore only a brief report in support of goodwill and either very little or no supporting evidence for the other ten heads of claim, some for substantial amounts. The above directions were intended to provide the evidence for a fully supported claim, to enable TfL to respond and the Tribunal to understand the claimants' case. At the pre-trial review I accepted Mr Forsdick's submission that I should expess the order in peremptory terms due to the lack of progress by the claimants in formulating their claim 18 months after their own reference to this Tribunal.

35. On 20 May 2003 the claimants' solicitors, Kosky Seal, purported to comply with these directions by lodging a ring binder of documents. This contained: a witness statement by Mr Carmine Defeo, a former director of the claimant company; a brief explanation by Kosky Seal as to the valuation of stock, the business plan and the error in the accounts; a valuation of stock in the form of a letter from the claimants' accountants with other documents such as stock lists but no explanation; figures regarding directors' responsibilities and remuneration with no satisfactory explanation; and various documents supplied by Mr Cobb. At the cause hearing Mr Cowen said that the documents included a letter dated 15 May 2003 from Mr Langley to Kosky Seal explaining the error in the accounts. It was found, however, that this letter had been omitted from the ring binders sent to TfL and this Tribunal.
36. In my judgment, this bundle of miscellaneous documents does not comply with paragraphs 2-4 of the order of 22 April 2003. I find that on the due date under the peremptory order the requirement as to witness statements had been complied with but not the other requirements. The documents do not deal with the whole of the claim, including all supporting documents and explanations, as required. No supplementary expert reports from Mr Langley and Mr Cobb were lodged.
37. On 27 June 2003 these supplementary reports were sent to the Tribunal and TfL, just over five weeks late, without explanation or application to lodge out of time. Mr Langley's report is brief (four pages of text) and deals solely with paragraph 4 of the 22 April order (the error in the accounts). Mr Cobb's report is also brief (two pages of text) and is comment on the report of Mr R W Moore, an expert witness for TfL. These supplementary reports take the claimants' case little further.
38. If there had been compliance with paragraphs 2-4 of the order of 22 April 2003 the claimants would, as far as evidence is concerned, be ready for the hearing. These directions required them to set out the whole of their claim, with all supporting documents and explanations, in the expert reports of Mr Langley and Mr Cobb and witness statements for any witnesses of fact. The actual position is very different. The evidence of Mr Langley and documents such as the claimant company's accounts and business plan, although barely adequate to support a claim of £446,832 for loss of goodwill are in my view, just sufficient to allow this head of claim to go forward to a hearing. Mr Forsdick acknowledged that TfL's accountancy expert, Mr Lemar, has enough information to allow him to make his own assessment of loss of goodwill (if any). On all other heads of claim, however, supporting explanations and evidence are non-existent or wholly inadequate. I was told at the cause hearing that Mr Defeo would be able to explain these claims with some support from Mr Langley and Mr Cobb. But Mr Defeo's witness statement does not deal with these claims at all and they are not adequately explained in the supplementary reports of Mr Langley and Mr Cobb. Indeed, in Mr Cobb's supplementary report he comments that information regarding management time, consultancy fees, interest and finance is to be provided by the directors.
39. My conclusion on the first question is therefore that the claimants did not, and still have not, complied with paragraphs 2-4 of the order of 22 April 2003. Further directions would be needed, with further delay (even if they were complied with) and the vacation of the September hearing date.
40. I turn now to my second question, has sufficient reason been given for the failure to comply with the peremptory order? At it was expressed in Hytec (at 1674H and 1675A): the sanction must be deployed unless the most compelling reason is advanced to exempt the failure to comply; a sufficient exoneration will almost inevitably require the defaulting party to show that something beyond his control has caused his failure to comply with the order.
41. Although it is Mr Cowen's primary contention that the claimants have, wholly or substantially, complied with the peremptory order, he also put forward the following reasons for non-compliance. He said that it was a mixture of confusion as to how to comply and communication problems between the claimants' solicitor and experts. In the case of Mr Cobb it was not clear what was expected of him in his supplementary report. He had nothing to add to his initial report and the view was taken by the claimants' representatives that all Mr Cobb needed to do was to supply all the documents which supported and supplemented his initial report. Mr Cowen said that any failure to comply with the order was not the fault of the claimants but of their advisors.
42. Before looking at the reasons put forward to explain the non-compliance I would comment that I am surprised that Mr Bates of Kosky Seal, who has been handling this case since October 2002, did not put in a statement or affidavit for the cause hearing explaining the steps taken to comply with peremptory order and any reasons for non-compliance. He did not attend the cause hearing (I was told he was on holiday). Mr Cowen was, understandably, in some difficulty in attempting to explain the non-compliance and the action taken by Mr Bates to comply with the order. On 5 June the cause hearing was fixed for 1 July; Mr Bates therefore had three weeks to prepare a statement or affidavit. He should have realised the seriousness of his clients' position and the urgent action needed to avoid a debarring order.
43. As to the reasons given for non-compliance, I do not find them persuasive. They certainly do not show a compelling reason or that something beyond the claimants' control prevented compliance with the peremptory directions (see Hytec at 1674H and 1675A). It should have been clear to Mr Bates after the pre-trial review that urgent action was required to put the claimants' case in order but I do not think that such action was taken. The ring binder lodged to comply with the peremptory order has every appearance of being put together hurriedly at the last minute (it was lodged at the end of the last day). No good reason has been given as to why the brief supplementary reports of Mr Langley and Mr Cobb could not have been lodged on the due date and were sent five weeks out of time. I suspect that they were not prepared until after the cause hearing was fixed on 5 June (both were lodged on 27 June and Mr Cobb's report is dated 26 June). In my view the peremptory directions are clear: the claimants were required to set out their case (with all supporting documents and explanations) in witness statements (eg from directors of the claimant company) and in supplementary reports from their two experts, Mr Langley and Mr Cobb. Mr Langley's supplementary report was also required to deal to deal specifically with the errors in the accounts and the further checks made. Mr Bates appeared for the claimants at the pre-trial review, which lasted just under one hour, and there was full discussion of the requirement to put the claimants' case in order. If confusion arose between Mr Bates and the two experts (who I believe were not present at the pre-trial review) that is not a good reason for non-compliance with the peremptory directions. I was told by Mr Cowen that Mr Cobb did not see a copy of these directions until after the due date of 20 May. This seems to me to be unsatisfactory and confirms my view that there was a lack of urgency in dealing with the peremptory order.
44. As to the uncertainty regarding Mr Cobb's supplementary report, I can see that, from what has subsequently emerged as to the somewhat anomalous position of Mr Cobb in these proceedings, this may have caused confusion. But this is of the claimants' own making due to the confusion as to how they were proposing to support their claims at the hearing. Mr Cobb made the reference and no doubt has been advising the claimants and negotiating with TfL. He put in an expert report which refers to 11 heads of claim and as to the claim for loss of goodwill he specifically mentioned another expert. At the pre-trial review last April it was made clear to Mr Bates that a supplementary report was required from Mr Cobb to explain and support the heads of claim listed in his initial report and regarding which it appeared that he would give evidence (other than goodwill). No indications were given then that he would not be giving evidence in support of these claims. This emerged at the cause hearing when Mr Cowen, after a short adjournment which allowed him to take instructions, said that Mr Defeo would be supporting these heads of claim with possibly some evidence from Mr Cobb as to his fees and from Mr Langley as to the value of stock and accountancy fees. Mr Defeo's witness statement, however, does not contain any reference to these heads of claim.
45. Mr Cowen's submission that any failure to comply with the order was not the fault of the claimants but of their advisers is, although no doubt correct, is not, in my judgment, a good reason for non-compliance or for relief from sanctions. Ward LJ dealt with this point in Hytec (at 1675H) (see para 27 above). For the reasons given by him I do not distinguish between the claimants and those advising them: the errors of those advisers are unfortunately visited on World Class Gifts and this is not a reason for relief from sanctions.
46. For the reasons given above, I am not satisfied that sufficient reason has been given by the claimants for their failure to comply with the peremptory order. Under rule 46(2) of the Lands Tribunal Rules the claimants "have failed to comply with any of the provisions of these Rules," namely to comply with a peremptory order made under the Rules. No sufficient reasons for non-compliance have been given.
47. I turn now to the other requirement for the operation of rule 46(2) and my third question, have the claimants failed to pursue the proceedings in this reference with due diligence? The Shorter Oxford English Dictionary defines "diligence" to include "speed, dispatch", "careful attention, heedfulness" and, in the context of law, "the attention and care due from a person in a given situation." It is in these senses of the word that I consider this question. Have the claimants pursued the reference with speed and dispatch? Have they given careful attention to the preparation of their case in the reference? In particular, has the claimants' case received due attention and care from the claimants' solicitors and experts? The duty to proceed with due diligence encompasses the whole of the proceedings, not solely the period after the peremptory order (see Rees-Davies at 220 (CA)).
48. I am not satisfied that the claimants have pursued the proceedings with due diligence. The reference was made to the Tribunal by the claimants in November 2001; 18 months later little progress has been made and their case is still almost wholly incomplete. It is important to note that the reference was made by the claimants. They initiated the proceedings and should have been prepared to pursue them expeditiously. They cannot be said to be reluctant litigants as might have been the case if the reference had been sprung upon them by TfL. Detailed consideration of the proceedings shows a lack of speed, dispatch, care and attention on the part of the claimants.
49. Expert reports were initially required by 9 January 2001. The time limits were then extended by agreement following applications by TFL until 30 September 2002. On this date two expert reports were lodged by TfL; no reports were lodged by the claimants and no extension of time to do so was sought. On 12 December 2002, more than two months after the September deadline, application was made by the claimants for an extension of time to 10 January 2003 to lodge expert reports. This was granted. Mr Cobb's brief initial report was lodged slightly out of time on 14 January and referred to a further report to be provided by another expert on goodwill. On 24 February Kosky Seal in a letter to the Tribunal stated that "if necessary an application will be made for additional expert". No application was made but Mr Langley's initial report was then lodged on 3 April, nearly three months out of time. No application was made to lodge this late report. Supplementary reports for Mr Langley and Mr Cobb were ordered at the pre-trial review on 22 April 2003 to be lodged by 20 May 2003. They were lodged, again without explanation or application for an extension of time, on 27 June 2003, five weeks late.
50. At the cause hearing on 1 July 2003 (18 months after the claimants' reference) the claimants' case was still extremely brief and in substantial disarray. In the two reports of Mr Langley there is barely sufficient evidence to support a loss of goodwill claim of £446,832. There is almost no evidence to support the other heads of claim, totalling around £220,000. Mr Cobb's reports are brief and it appears that he is not to be the witness for the heads of claim set out in his reports. To complete the claimants' case now it would be necessary to have a further witness statement from Mr Defeo and additional reports from Mr Langley and Mr Cobb. On these facts I am satisfied that the claimants have failed to pursue the proceedings (which they initiated) with due diligence. There has been a total disregard (without reason) of the time limits sit by the Tribunal.
51. My fourth question is does the claimants' failure to comply with the peremptory order affect the September hearing date or prejudice TfL in the resolution of this dispute?
52. Mr Cowen accepted that completion of the claimants' case would require a further witness statement by Mr Defeo supplemented by additional reports from Mr Langley and Mr Cobb. But he said that these could be provided in two weeks. I am doubtful whether that short time limit could be met, having regard to the slow progress of the claimants' case so far, where time limits have not been met. The holiday season is also approaching. In my view, at least four weeks are needed to enable the witness statement and expert reports to be prepared. I am, however, sceptical as to the claimants' ability to meet even that longer time period and there would probably be missing information requiring a further period for clarification and completion. Under paragraph 5 of the order dated 22 April 2003 TfL then have six weeks to lodge supplementary expert reports and any witness statements in reply to the whole claim, which should by now have emerged. This total period of 10 weeks from 1 July would end on 9 September, two weeks before the start of the hearing on 24 September. Directions have been given for the agreement and lodging of a statement of agreed facts and a trial bundle 14 days before the hearing with skeleton arguments seven days before the hearing. Even if the claimants could meet a four weeks time limit it would be necessary to vacate the September hearing date.
53. In my judgment, TfL would be prejudiced by further delays in the resolution of this claim. Entry was taken in November 2000 or February 2001 and the reference was made by the claimants 18 months ago. Interest is accruing on the outstanding compensation with effect from one of the entry dates. TfL are entitled to look to the Tribunal to keep to the September hearing date. I find that the claimants' failure to comply with the peremptory order affects the hearing date and is to the prejudice of TfL in the resolution of this dispute.
54. Finally, I consider whether a debarring order, in relation to the whole or part of the claim, is proportionate and in pursuit of a legitimate aim?
55. The peremptory order told the claimants that failure to comply could lead to their being debarred from taking any further part in the proceedings. Having regard to the limited compliance with the order, I debarred them from adducing evidence or making submissions on their heads of claim other than for loss of goodwill. This latter is a claim for £446,832 out of a total claim of around £670,000 and therefore represents the bulk of their claim (67%). I took the view that, although Mr Langley's reports are brief and his explanations short, there is just enough supporting evidence for this head of claim to go forward to a hearing and for TfL to respond to it. That is not the position with the other heads of claim, where supporting evidence is wholly insufficient to allow these claims to proceed to a hearing and for TfL to respond. The claimants are therefore debarred from adducing evidence or making submissions in support of their heads of claim other than loss of goodwill.
56. In my judgment, this sanction is proportionate and in pursuit of the legitimate aim of keeping to the listed hearing date and an early resolution to the dispute. The claimants can proceed at the hearing with the bulk of their claim and, although debarred from supporting the other heads of claim at the hearing, may still negotiate these claims with TfL. They are not debarred from obtaining compensation from TfL for these losses (if any) if they can be proved. Mr Forsdick confirmed that TfL, as a public body, recognise that they are required to pay full compensation for the acquisition of part of the claimants' premises and will do so provided the claimants are able to explain and support their claims. It is therefore for the claimants to provide the necessary explanations and support for the other heads of claim and to enter into realistic negotiations with TfL. Even if agreement cannot be reached these heads of claim are still before the Tribunal and, provided sufficient information has been given to TfL, I will expect their witnesses to put forward their calculations of loss (if any) for inclusion in my determination.
57. My conclusion on the final question is therefore that the debarring order is proportionate and in pursuit of the legitimate aim of keeping to the listed September hearing date and the early disposal of the proceedings.
58. In summary, I have found that the claimants have not complied with the peremptory order of 22 April 2003, without sufficient reason, and have failed to pursue the proceedings with due diligence. The two requirements of rule 46(2) of the Lands Tribunal Rules 1996 are satisfied, bringing into play the Tribunal's discretion under the rule. The claimants' failure to comply with the peremptory order has prejudiced the listed hearing date in September 2003 and has prejudiced TfL by preventing the early resolution of this dispute. In the exercise of my discretion under rule 46(2) I have made an order under paragraph (2)(c) debarring the claimants from adducing evidence or making submissions in support of their heads of claim other than for loss of goodwill. I am satisfied that this order is proportionate and in pursuit of the legitimate aim of keeping to the listed hearing date and the early resolution of the dispute.
59. I heard submissions on costs. Mr Forsdick, asked for costs on an indemnity basis; Mr Cowen, said that I should make no order as to costs. In my judgment, the cause hearing on 1 July would not have been necessary if the claimants had complied with the peremptory order. They have been able to show cause why they should not be wholly debarred from taking any further part in the proceedings but have been debarred from proceeding with their claims other than for loss of goodwill. In the circumstances it would, in my view, be wrong for TfL to have to meet any part of their costs of the hearing, which was entirely due to the default of the claimants and where they were only partly successful. I have given the claimants the benefit of the doubt regarding loss of goodwill, notwithstanding the lack of evidence in support, but I do not think that they should be relieved from meeting the whole of TfL's costs of the hearing. Accordingly, I ordered the claimants to bear their own costs of the cause hearing on 1 July 2003 and to pay TfL's costs in any event, such costs, if not agreed, to be the subject of a detailed assessment on an indemnity basis by the Registrar of the Lands Tribunal.

DATED: 5 August 2003

(Signed P H Clarke)