[2025] UKUT 325 (LC)

The relevant statutory provisions are not in dispute.

Section 29 of the Tribunals, Courts and Enforcement Act 2007 provides:

As amended, Rule 10 provides, so far as relevant (and with my emphasis):

“Orders for costs

10.

– (1) The Tribunal may make an order for costs on an application or on its own initiative.

Section 4 of the 1961 Act provides:

“4.— Costs.

(A1) In any proceedings on a question referred to the Upper Tribunal under section 1 of this Act—

(a)

the following subsections apply in addition to section 29 of the Tribunals, Courts and Enforcement Act 2007 (costs or expenses) and provisions in Tribunal Procedure Rules relating to costs; and

(b)

to the extent that the following subsections conflict with that section or those provisions, that section or those provisions do not apply.

(1)

Where …—

(a)

the acquiring authority have made an unconditional offer in writing of any sum as compensation to any claimant and the sum awarded by the Upper Tribunal to that claimant does not exceed the sum offered; or

(b)

the Upper Tribunal is satisfied that a claimant has failed to deliver to the acquiring authority, in time to enable them to make a proper offer, a notice in writing of the amount claimed by him, containing the particulars mentioned in subsection (2) of this section;

the Upper Tribunal shall, unless for special reasons it thinks proper not to do so, order the claimant to bear his own costs and to pay the costs of the acquiring authority so far as they were incurred after the offer was made or, as the case may be, after the time when in the opinion of the Upper Tribunal the notice should have been delivered.

(2)

The notice mentioned in subsection (1) of this section must state the exact nature of the interest in respect of which compensation is claimed, and give details of the compensation claimed, distinguishing the amounts under separate heads and showing how the amount claimed under each head is calculated.

(3)

Where a claimant has delivered a notice as required by paragraph (b) of subsection (1) of this section and has made an unconditional offer in writing to accept any sum as compensation, then, if the sum awarded to him by the Upper Tribunal is equal to or exceeds that sum, the Upper Tribunal shall, unless for special reasons it thinks proper not to do so, order the acquiring authority to bear their own costs and pay the costs of the claimant so far as they were incurred after his offer was made.

(4)

The Upper Tribunal may in any case disallow the cost of counsel.

(5)

Where the Upper Tribunal orders the claimant to pay the costs, or any part of the costs, of the acquiring authority, the acquiring authority may deduct the amount so payable by the claimant from the amount of the compensation payable to him.”

Section 4 of the 1961 Act is normally relied upon where the Tribunal’s determination of compensation does not exceed an unconditional offer made by an acquiring authority, and the usual order in those circumstances is that the authority would be awarded its costs ‘from the date the offer was made’. (Footnote: ¹)

That did not happen in this reference (the authority’s offer of £325,000 being significantly below my determination of compensation of £1,510,000). S.4(1)(a) is not engaged in reverse simply because the authority’s offer did not beat the Tribunal’s award. In those circumstances that offer is irrelevant.

Instead, we need to look at s.4(3), and the claimant’s offer to settle at £975,000, which the Tribunal’s award exceeded. S.4(3) indicates in those circumstances the Tribunal shall, unless there are special reasons not to do so, order the authority to bear their own costs and “pay the costs of the claimant so far as they were incurred after his offer was made.”

But what about the costs of a successful claimant up to the point it made the offer that the Tribunal’s award exceeded? It seems to me that for the period after the date of the claimant’s offer, I am bound by s.4 - the Tribunal ‘shall unless for special reasons it thinks proper not to do so, order the acquiring authority to bear their own costs and pay the costs of the claimant so far as they were incurred after his offer was made” – so the default position is that the claimant shall be awarded his costs ‘unless…’.

For the period before that offer, the Tribunal still has the power to award costs, but this is a discretionary power under s.29(1) of the 2007 Act, free of the s.4 constraints.

The Tribunal’s Rule 10(12)(c) is amplified by the Upper Tribunal (Lands Chamber) Practice Directions (January 2024):

“How the power to award costs is exercised

25.10

The Tribunal’s power to award costs is discretionary, and it will usually be exercised in accordance with the principles applied in the High Court. The general rule is that the successful party ought to receive their costs from the unsuccessful party… The Tribunal will have regard to all the circumstances of the case, including the conduct of the parties; whether a party has succeeded on part of their case, even if they have not been wholly successful; and admissible offers to settle. The conduct which may be considered will include conduct during and before the proceedings; whether a party has acted reasonably in pursuing or contesting an issue; the manner in which they have conducted their case; whether or not they have exaggerated their claim; and whether they have unreasonably refused to engage in ADR or comply with a relevant pre-reference protocol.

25.11

The Tribunal will normally award costs on the standard basis. Costs will only be allowed to the extent that they are reasonable and proportionate to the matters in issue, and any doubt as to whether costs were incurred or reasonable and proportionate will be resolved in favour of the paying party.

25.12

Exceptionally the Tribunal may award costs on the indemnity basis. On this basis, the receiving party will receive all their costs, except for those which have been unreasonably incurred or which are unreasonable in amount, and any doubt as to whether the costs were incurred or are reasonable in amount will be resolved in favour of the receiving party.”