[2025] UKUT 325 (LC)

Mr Williams KC submitted that the authority’s conduct has been sufficiently inappropriate that the claimant’s costs should be assessed on the indemnity basis.

The authority a) issued a reference to the Tribunal despite the parties being in negotiations; in doing so b) ignored the Land Compensation Claims Protocol, viz “a reference should not be made when the resolution of outstanding issues is still actively being explored”; c) the reference was not accompanied by any plans, drawings or valuation evidence showing potential AAD, and none were forthcoming despite valuations being produced in late 2023; d) the claimant’s AAD was sent to the authority in January 2024 in accordance with the agreed timetable, yet the authority’s AAD was not sent to the claimant until the exchange of expert reports (and then it increased the number of units).

But most significantly, the claimant says, the authority changed the legal basis of its entire case when it submitted Mr Trustram-Eve’s report in June 2024, without notifying the claimant in advance, reducing its suggested compensation from £161,250 to £10,750. This significantly contradicting the authority’s pleaded case to that point, which was advanced on the same basis as the claimant’s pleadings and evidence and which was the basis I eventually adopted in the compensation decision. Had the authority maintained its position on the correct approach to valuation then all the valuation permutations on that basis would have been agreed, leaving a small number of issues in dispute, and all leading to a substantial compensation award rather than the £15,000 then pleaded.

Mr Williams KC submitted that these behaviours are clearly out of the norm. The authority rushed into issuing the reference with no notice, no adherence to the Protocol or, seemingly, legal advice. It produced inadequate details to support its case, did not produce plans or drawings, and it failed to share evidence in a timely manner. It then, once it had instructed solicitors and counsel, proceeded to change the basis of its case at a very late stage and with no notice, and with no formal application to the Tribunal.

In response, Ms Clutten submitted that an acquiring authority is as entitled as a claimant to submit a reference at a time of its choosing within the six-year limitation period. Colliers (the claimant’s third set of advisors) submitted a claim for compensation in October 2021, but no substantive discussions were held with them. An offer to settle was made to Colliers in June 2023, but the authority was informed in August that the firm was no longer acting. Discussions with the claimant’s solicitors then ensued regarding the management of the case, including the potential for either side making a reference to the Tribunal. No planning or valuation issues were discussed, and in the end the authority decided to make the reference. The failure to comply with the Protocol was a regrettable oversight, but given the failure of the claimant’s experts to engage until a very late stage, compliance with the Protocol would not have narrowed the issues or led to resolution of all or part of the case.

As for the reference not including plans etc, Ms Clutten submitted that the reference complied with the Tribunal’s Practice Direction 6.2, in that it did ‘identify the relevant facts, the issues to be determined by the Tribunal, and the outcome which the party is asking for. Each statement of case must set out the key facts on which the party relies.” The claimant was able to plead its reply, and did not seek further and better particulars. Ms Clutten noted that PD 6.5 confirms that “Documents must not be annexed to a statement of case unless they are necessary to identify the issues.”

In regard to the authority changing its case, Ms Clutten pointed out that the departure from its pleaded case was sanctioned by an order of the Tribunal, and that the authority agreed to pay the claimant’s consequential costs at that time. The costs consequences of the change in procedural terms have therefore already been addressed. Had the change, and its timing, been procedurally unfair or inappropriate in principle, permission could have been refused. She referred to correspondence between the parties in which it was indicated that the authority would have liked to have explained its position to the claimant, but the claimant’s expert would not engage.

In short, Ms Clutten submitted, while the authority has not succeeded in its legal arguments on valuation, its position, in the light of s.6A of the 1961 Act being considered for the first time by the Tribunal, was a reasonable one to adopt. The conduct of the claimant’s experts in failing to engage is a further reason not to award costs to the claimant on an indemnity basis.

I can deal with this fairly briefly. Awarding costs on the indemnity basis is, as the Practice Directions referred to above note, exceptional. It is generally reserved for cases where a party’s conduct has been out of the normal range of acceptable litigation behaviour. I am not persuaded there is anything sufficiently exceptional or abnormal in this case, although it should certainly not be taken as a model. The Tribunal encourages compliance with the Protocol, and in an appropriate case it will take a departure from it into account, including by awarding costs on the indemnity basis if appropriate. But either party is at liberty to make a reference at a time of its choosing, and there is reason to think that the claimant and its successive advisers were not fully committed to achieving a prompt negotiated settlement. Leisurely compliance with the Protocol should not be allowed to become an excuse for delay and there is something to be said for grasping the nettle and commencing a reference if the pre-reference process appears to have stalled. As for the authority’s statement of case, the Tribunal encourages these to be as brief as the circumstances allow, and limited to the level of detail required sufficient to enable the other party to understand the case of the party making the reference; it is not the place for detailed plans etc, as the Practice Direction indicates. As for the authority’s change of position, as Ms Clutten submitted this was sanctioned by the Tribunal’s order of 2 August 2024.

Each party accuses the other of lack of engagement, etc, which I refer to above. While not ideal, there is nothing exceptional in this to warrant an award of costs on the indemnity basis. If they cannot be agreed, the claimant’s costs shall be assessed on the standard basis.

Either party has a right to appeal to the Court of Appeal on any point of law arising out of the compensation decision. Since an application for costs has been made, any application for permission to the Court of Appeal must be sent or delivered to the Tribunal within one month of the date of this costs decision (rule 55(2)(b)).

The authority requests that the Tribunal orders that payment of compensation should be made within 28 days of this decision, save where any application is made to the Court of Appeal, in which case compensation should be payable within 28 days of the final determination of any appeal.

The general rule is that an appeal does not operate as a stay on enforcement of an award of compensation (or payment of an award of costs), but that the Tribunal may order a stay if there is a risk of injustice. The authority has tendered a report prepared by Avison Young, its surveyors, designed to persuade me of a risk that, in the event of a successful appeal, it would not be able to recover the compensation paid out to the claimant. In my judgment consideration of an application for a stay is premature, and the appropriate time to consider such an application is when an application is made for permission to appeal. I would warn the authority, however, that I am unlikely to grant any application unsupported by proper evidence or which seeks a blanket stay on any payment. The authority has had the claimant’s land since late 2019, without paying anything approaching a credible compensation sum, and it cannot expect that to continue. One reason why an application for a stay should be considered in tandem with any application for permission to appeal is so that the authority can identify the outcome it seeks on an appeal, and the compensation which, with the benefit of my decision, it now considers it ought to pay.

I decline the authority’s invitation to impose a conditional stay of enforcement at this stage.