Mann & Ors v Transport for London

Where the Upper Tribunal’s procedural regime gives a broad discretion on costs but contains no equivalent of the costs-consequences code in Civil Procedure Rules 1998 Part 36, a claimant who betters an admissible settlement offer has no entitlement or presumption in favour of indemnity costs. The offer is a relevant circumstance, but its terms cannot unilaterally introduce a Part 36-style sanction.

Indemnity costs remain exceptional. Whether they are justified depends on all the circumstances, including the parties’ conduct and the reasonableness of a refusal to settle. The Tribunal’s conclusion that the refusal was not unreasonable was a fact-specific exercise of discretion, not an additional fixed legal test.

The appellants owned properties near the Coulsdon Inner Relief Road. They brought claims under Part I of the Land Compensation Act 1973 for depreciation caused principally by increased road noise.

Before the hearing, they made without-prejudice-save-as-to-costs offers to settle at lower levels of compensation and stated that they would seek indemnity costs if the offers were bettered. The Upper Tribunal awarded compensation exceeding the offers for the successful claimants, but ordered their costs to be assessed on the standard basis in its Costs Addendum.

On appeal from the Upper Tribunal (Lands Chamber), [2016] UKUT 0126 (LC), the central issue was whether the Tribunal had erred in refusing indemnity costs.

Appeal dismissed. Lindblom LJ, with whom McFarlane LJ agreed, held that the Tribunal had made no error of principle and had reached a conclusion open to it.

1. An appellate court should not interfere with the Tribunal’s discretionary costs decision unless its approach is obviously wrong or its conclusions are demonstrably unsound. Neither condition was met.

2. Section 29 of the Tribunals, Courts and Enforcement Act 2007, rule 10 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, and the Practice Directions confer a deliberately broad costs discretion. Paragraph 12.4 of the Practice Directions makes the standard basis normal and indemnity costs exceptional, but supplies no fixed criteria for distinguishing the two. The question is for the Tribunal on the circumstances of the individual case.

3. The Tribunal had not imposed an inflexible rule that indemnity costs could only follow unreasonable conduct. Its reference to whether TfL had acted unreasonably in refusing the offers was its fact-specific inquiry into whether there was an exceptional feature justifying indemnity costs. It was entitled to regard TfL’s case as not patently hopeless, properly argued, and not deserving of a sanction or mark of disapproval.

4. The Rules and Practice Directions contain no self-contained procedure equivalent to Part 36 of the Civil Procedure Rules 1998. A claimant may make a timely and realistic offer, and it remains relevant on costs, but cannot secure the automatic or presumptive consequences of Part 36 merely by framing the offer in those terms. The civil-litigation authorities, including [2002] EWCA Civ 66, did not undermine that conclusion.

5. The Tribunal was therefore entitled to order the successful claimants’ costs on the standard basis.

• Court of Appeal (Civil Division) Dismissed the claimants’ appeal and upheld assessment of their costs on the standard basis: [2018] EWCA Civ 1520.
• Upper Tribunal (Lands Chamber) Awarded compensation for depreciation in the successful claims and, in its Costs Addendum, ordered costs to be assessed on the standard basis: [2016] UKUT 0126 (LC).