[2024] UKUT 00210 (LC)

I start with the incidence of costs. The application of the Appellants is for an order for payment by the Respondents of the Appellants’ costs of the Appeal and the Cross Appeal (“the Appellants’ UT Costs”) and the Appellants’ costs of the FTT Proceedings (“the Appellants’ FTT Costs”). Mr Wilmshurst’s position, on behalf of the Appellants, was a simple one. The Appellants had won in relation to the Appeal and the Cross Appeal and, by reason of the UT Decision, it was apparent that the Appellants should have won in the FTT, thereby justifying a complete reversal of the FTT Costs Order. By reference to the usual principle of costs following the event, Mr Wilmshurst submitted that the Appellants were entitled to the Appellants’ UT Costs and the Appellants’ FTT Costs.

Mr Hale did not dispute the basic principle that the Appellants should have their costs, but he submitted that there were good reasons for applying substantial discounts to the Appellants’ costs. His submissions fell into three broad parts. First, taking an issues based approach, the Appellants had lost on significant issues in the FTT and in the UT, which justified substantial discounts. Second, the Appellants had, without good reason, refused offers of alternative dispute resolution (“ADR”) in relation to both the FTT Proceedings and the Appeal and the Cross Appeal, which should be reflected in the costs orders which I make. Third, the Appellants had not come to the FTT Proceedings with clean hands, in the sense that the Appellants had removed the Staircase without prior warning or notice to the Respondents, thereby presenting the Respondents with a fait accompli. The submission was that I should reflect the disapproval of this kind of conduct on the part of the Tribunal by applying a discount to the Appellants’ costs.

So far as the Appeal and Cross Appeal are concerned, I can see no case for applying an issues based approach to the UT Costs. It is true that the Appellants lost on Ground 2, but I agree with Mr Wilmshurst that there was a considerable overlap between the arguments in relation to Ground 1 and the arguments in relation to Ground 2. I cannot see that the time and costs of the Appeal and the Cross Appeal would have been materially different if Ground 2 had not been pursued by the Appellants. To my mind Ground 2 qualifies as an incidental issue, lost by the Appellants along the way to victory in the Appeal and the Cross Appeal. In those circumstances I conclude that there is no justification for an issues based approach to the UT Costs. It seems to me that the principle of costs following the event is not displaced by the Appellants’ defeat on Ground 2. I therefore apply no discount to the Appellants’ UT Costs for this factor.

Turning to the FTT Proceedings, the position seems to me to be different. Although the hearing in the FTT only lasted a day, it is clear, both from the FTT Decision itself and from the submissions of counsel for the Appellants, to which I was taken by Mr Hale, that considerable time was taken up with the question of whether the Respondents could demonstrate the required period of 20 years use of the Staircase. It is clear that the evidence and the argument were not confined to the issue of the legibility of the Sign, on which the Appellants won, or the effect of the Wording, on which the Appellants should, by reference to the UT Decision, have won. It is clear that the Judge had to spend some considerable time dealing with issues relating to the question of whether the Use had occurred for the required period of time. The Respondents were successful in demonstrating, on the evidence, that the Use had endured for the required period of time. In my judgment, this is a factor which does justify a departure from the principle of costs following the event. I consider it appropriate to apply a discount to the Appellants’ FTT Costs to reflect this factor. The amount of the discount is necessarily a rough and ready assessment. I have decided that a 25% discount to the Appellants’ FTT Costs is a fair reflection of this factor.

I come next to offers of ADR. In relation to the FTT Costs, Mr Hale referred me to a letter from the Respondents, dated 3^rd December 2020, which offered ADR, albeit on the following terms:

In relation to the UT Costs Mr Hale referred me to an email which he sent to the Appellants on 25^th July 2023, following the FTT Decision, in which the Respondents offered a round table meeting to try to resolve the dispute.

Mr Hale’s submission was, in summary, that the Respondents had offered ADR in relation to both the FTT Proceedings and the Appeal and Cross Appeal, which the Appellants had not accepted. The refusal to participate in ADR was, so Mr Hale submitted, unreasonable, and should attract a sanction in costs.

I was taken to a good deal of the correspondence between the parties in this context, and the submissions were fairly detailed. Ultimately however I am not persuaded that this is a case where it is appropriate for me to apply a sanction to the Appellants, in terms of costs, on the basis of a failure to engage with ADR. So far as the letter of 3^rd December 2020 was concerned, it did receive a lengthy response from the Appellants, which set out their case at length and made reference to what was alleged to have been a previous offer to re-site the Staircase. This letter in reply did not respond specifically to the offer of ADR, but what is apparent from this letter, and from the terms of the offer of ADR which I have quoted above, and from subsequent correspondence between the parties is that this was, unfortunately, one of those cases where neither side were willing commit themselves to a negotiation where meaningful concessions could or might be made. The positions of both parties appear to me to have been pretty entrenched from the outset. Unfortunately, this case seems to have been one of those cases where the dispute was always going to have to be resolved by a decision of the FTT and any appeal against that decision.

So far as the later offer of the round table meeting was concerned it appears, from the correspondence which I was shown, that this offer was not actually rejected by the Appellants. Rather, the offer does not appear to have been pursued by the parties. The correspondence which I was shown did not appear to reach any final position, but instead petered out. Again, however it seems to me that the appeal proceedings were always going to have to be resolved by a decision of the Tribunal.

I therefore conclude that there should be no discount in respect of either the FFT Costs or the UT Costs on the basis of unreasonable refusal of ADR.

This leaves pre-action conduct. I do not consider that it is appropriate to apply any discount in relation to pre-action conduct. As matters have turned out, the Appellants were entitled to remove the Staircase. So far as the circumstances in which that removal took place are concerned, I do not think that there is any justification to apply a discount to the Appellants’ recoverable costs.

I therefore conclude, so far as the incidence of costs is concerned, that the Respondents should pay the Appellants’ UT Costs, and that the Respondents should pay 75% of the Appellants’ FTT Costs.