Hamish G Johnston & Ors v TAG Farnborough Airport Limited

In injurious-affection proceedings, the Tribunal may use its broad costs jurisdiction to impose a proportionate costs cap where uncertainty about adverse costs creates a real risk that claims will become unsustainable. The Tribunal must have regard to the size and nature of the dispute, the parties’ resources and protection, the likely costs, and the practical consequences of refusing relief.

A complete exemption from future adverse costs under rule 10(7) of the Tribunal Procedure (Upper Tribunal)(Lands Chamber) Rules 2010 requires a sufficient evidential basis. A cap may nevertheless be justified to prevent intimidation of claimants and consequent loss of access to determination. A reciprocal cap is discretionary, not automatic, and need not include a conditional-fee uplift where that would deprive lawyers of the benefit of the funding arrangements enabling the claims.

Two groups of homeowners sought compensation under Part I of the Land Compensation Act 1973 for alleged depreciation caused by the civilian use and alteration of Farnborough Airport. The Johnston proceedings involved claims concerning earlier works. The Dandy proceedings involved five claimants and were intended to operate as a test case for wider claims.

The claimants applied for protection from future adverse costs, or alternatively reciprocal costs caps, before a joint trial of preliminary issues. The Johnston claimants had conditional fee agreements but no after-the-event insurance. The Dandy claimants had such agreements and £1 million adverse-costs insurance. The central issue was whether the Tribunal should protect or cap the claimants’ exposure to costs.

1. The application succeeded in part. The Tribunal refused costs protection and a costs cap in the Dandy proceedings. It imposed a costs cap in the Johnston proceedings of £4,000 per property, applicable to the whole costs of those proceedings up to the conclusion of the preliminary issues. It also imposed a reciprocal cap of £960,000 on the claimants’ recoverable base costs if Johnston succeeded.

2. Rule 10(7) of the Tribunal Procedure (Upper Tribunal)(Lands Chamber) Rules 2010 authorises an order only in respect of costs subsequently incurred. It does not authorise retrospective costs protection. The Tribunal’s costs jurisdiction under section 29 of the Tribunals, Courts and Enforcement Act 2007, read with rule 10, nevertheless permits a costs cap where appropriate.

3. In the Dandy proceedings, the existing after-the-event insurance, the possibility of additional cover, and the ability of the wider body of potential beneficiaries to share exposure meant that refusal of relief would not stifle the test claims. A speculative cap at that late stage was not feasible on the information available. Detailed assessment was the appropriate safeguard.

4. In the Johnston proceedings, the absence of evidence of each claimant’s means prevented complete immunity from future adverse costs. Such immunity would have been unjust to the respondent. However, the evidence established a real risk that uncertainty over liability would cause claimants of modest means to withdraw, increase the burden on those remaining, and make the proceedings unsustainable. A £4,000-per-property cap fairly controlled that risk while reflecting the claims’ increased complexity and potential value.

5. A reciprocal cap was appropriate because the application had been advanced on that basis. The cap did not extend to the conditional-fee uplift. Including it would substantially deprive the claimants’ advisers of the benefit of the funding arrangements which enabled the claims, contrary to the interests of justice. The approach was consistent by analogy with the cited Civil Procedure Rules.

6. On the costs addendum, the respondent was successful in Dandy and the claimants were successful in Johnston. The joint application costs were allocated 60% to Johnston and 40% to Dandy, with detailed assessment on the standard basis if not agreed.

not stated in the judgment.