Winter & Anor v Traditional & Contemporary Contracts Ltd

The favourable costs presumption for an objector to the modification or discharge of a restrictive covenant applies where the objector has established the relevant property right. It does not govern a substantial preliminary dispute about whether the objector possesses that right. Such a dispute is closer to conventional property litigation and may be determined under ordinary costs principles.

A tribunal may refuse the successful objector's costs of establishing title where the objector failed to present satisfactory proof promptly and the applicant admitted the title soon after adequate material became available. The resulting costs order remains an exercise of judicial discretion.

The owners of neighbouring land objected to an application in the Lands Tribunal to modify a restrictive covenant. A preliminary issue arose as to whether their land enjoyed the benefit of the covenant. The preliminary hearing was adjourned because they were not ready formally to prove their title, and they were ordered to pay the costs of that hearing.

The applicant subsequently admitted their title. His Honour Judge Rich QC nevertheless made no further order for the costs of establishing it. The objectors appealed, arguing that costs should follow their success on the preliminary issue or that paragraph 22.4 of the Lands Tribunal Practice Direction entitled them to their costs. The central issue was whether the judge's costs order fell within his discretion.

1. By a majority, the appeal was dismissed. Carnwath LJ and Buxton LJ held that the judge's refusal to award the objectors their remaining costs of establishing title was within his discretion. The order was upheld.

2. Paragraph 22.4 of the Lands Tribunal Practice Direction reflects the special character of an application under section 84 of the Law of Property Act 1925. Where an objector has the benefit of a covenant, the applicant seeks compulsory interference with an existing property right for the applicant's benefit. It is therefore reasonable that the usual costs assumptions favour the objector.

3. That presumption does not extend to a substantial preliminary dispute about whether the objector has the property right at all. Such a dispute is closer to ordinary property litigation and is appropriately governed by ordinary costs principles. The approach in Fairclough Homes Ltd [2004] EWLands LP/30/2001 arose where the objectors' entitlement to the restrictions was not disputed and therefore did not determine the present situation.

4. Carnwath LJ stated that an applicant should generally have an opportunity to consider the evidence supporting the objector's title before becoming exposed to costs. If the applicant thereafter persists unsuccessfully in disputing title, ordinary costs principles may require payment of the objector's costs. Conversely, an objector who delays a development by asserting a right that cannot be established may be ordered to pay the costs. A costs claimant should identify precisely which costs are claimed and from what date.

5. The objectors had not presented satisfactory proof when their objection was launched and were unable formally to prove their case at the preliminary hearing. The applicant was not obliged to accept the incomplete material supplied earlier but admitted title promptly after the relevant plan and assurance became available. Those matters entitled the judge to refuse the objectors their costs, although another judge might reasonably have reached a different decision.

6. Longmore LJ dissented. He considered that the applicant's eventual concession meant that the objectors had won the preliminary issue. Since the costs of the abortive hearing had already been awarded separately, costs of establishing title should otherwise have followed the event in the absence of special circumstances.

1. Court of Appeal (Civil Division): By a majority, dismissed the objectors' appeal and upheld Judge Rich's order making no further award for the costs of establishing their title.

2. Lands Tribunal: His Honour Judge Rich QC ordered the objectors to pay the costs of the adjourned preliminary hearing and subsequently made no further order concerning the remaining costs of proving their title. The substantive objection was later disposed of, with the preliminary-issue costs expressly excluded from the objectors' costs award.