Purfleet Farms Limited v Secretary of State for Transport, Local Government and the Regions

A claimant awarded more compensation than an acquiring authority’s unconditional offer is ordinarily entitled to the costs of the compensation reference. Departure requires a special reason. The claimant’s conduct must have caused an obvious and substantial escalation beyond the reasonable and necessary expense of vindicating the right to compensation.

A large disparity between the amount claimed and the award does not itself justify reducing costs. The tribunal should examine why the disparity arose and its effect on the proceedings. Reliance on unsuccessful expert valuation evidence will rarely suffice, but a proportionate reduction may be justified where evidence no competent valuer could reasonably regard as relevant wastes substantial time. The Civil Procedure Rules do not apply to the Lands Tribunal, although relevant costs criteria may assist its discretion when applied with the principle of equivalence in mind.

The appellant’s land was compulsorily acquired for the Channel Tunnel Rail Link. It claimed £12.26 million compensation, while the respondent valued the land at £3.75 million and made an unconditional offer of £5 million. After a nine-day hearing, the Lands Tribunal awarded £6.66 million.

The Tribunal treated the appellant as the successful party but awarded only three-quarters of its costs. It considered that the valuation had been assessed at a particularly high figure through reliance on wholly dissimilar and unreliable comparables, which had consumed substantial time. It also took account of adjournments attributable to the appellant.

The appellant appealed on a point of law under section 3(4) of the Lands Tribunal Act 1949. The central issue was whether costs in compulsory-purchase compensation references should follow ordinary civil-litigation principles and whether the principle of equivalence required the appellant to recover all its costs.

1. Appeal dismissed unanimously. Lord Justice Potter gave the leading judgment. Lord Justice Chadwick agreed and added observations; Mr Justice Wall agreed. The Lands Tribunal had been entitled to reduce the appellant’s recoverable costs to three-quarters.

2. A successful claimant, meaning one whose award exceeds the acquiring authority’s unconditional offer, is ordinarily entitled to the costs of a compensation reference. A departure requires a special reason. Such a reason exists where costs could not sensibly be regarded as part of the reasonable and necessary expense of determining the disputed compensation. The claimant’s conduct must have caused an obvious and substantial escalation beyond the costs reasonably incurred in vindicating the right to compensation.

3. The fact that the amount claimed greatly exceeds the award does not by itself establish relevant exaggeration. The Tribunal must examine the reasons for the disparity and its effect on the conduct, duration and cost of the proceedings. A defensible but unsuccessful argument does not justify a costs sanction. Nor will an issue with an insignificant effect on time and expense ordinarily justify one.

4. Adverse costs consequences based on an expert’s unsuccessful valuation evidence will be rare because valuation is inexact and legitimate differences may arise over comparables. Disallowance will usually require findings that no competent valuer could reasonably have regarded the comparable as genuinely relevant; its introduction wasted significant time; the respondent caused no equivalent waste through unreasonable unsuccessful issues; and the disallowance was proportionate.

5. The Tribunal had found that the appellant’s expert relied on wholly dissimilar, flawed and unreliable comparables. That reliance wasted substantial time and expense. The Tribunal was also entitled to include the adjournments attributable to the appellant in its overall assessment, although it made no separate order concerning them.

6. The Civil Procedure Rules did not apply to the Lands Tribunal. The Tribunal could nevertheless have regard to relevant costs considerations in its Practice Direction. Lord Justice Potter and Lord Justice Chadwick cautioned that those considerations must be applied with the principle of equivalence and the distinctive compulsory nature of compensation proceedings firmly in mind.

1. Court of Appeal (Civil Division): Dismissed the appeal and upheld the Lands Tribunal’s order awarding the appellant three-quarters of its costs. The issue of the appeal costs and their summary assessment was adjourned unless agreed.
2. Lands Tribunal: Awarded £6.66 million compensation and ordered the acquiring authority to pay three-quarters of the claimant’s costs. The reduction reflected principally the claimant’s reliance on unreliable comparables, the resulting waste of time and expense, and adjournments attributable to the claimant.