Penny Jane Gilchrist v C & C Equine Services Limited

A settlement offer marked only “without prejudice” cannot be treated as without prejudice save as to costs unless its terms, or an equivalent clear expression, indicate that it may be relied on when costs are decided. References to the savings which settlement would produce, or to each party bearing its own costs if the offer is accepted, do not by themselves create that implication.

An inadmissible offer must not influence the costs order. Where it was the sole basis for increasing the unsuccessful party’s liability for a later period, the costs decision should be re-made without that uplift.

C & C Equine Services Ltd applied to be registered as proprietor of two parcels of land. Ms Gilchrist objected. In the First-tier Tribunal, C & C succeeded concerning the yellow land and Ms Gilchrist succeeded concerning the pink land.

The First-tier Tribunal later ordered Ms Gilchrist to pay half of C & C’s costs before 12 December 2017 and all its costs thereafter. The increased liability followed her rejection of a 21 November 2017 settlement offer, which the tribunal treated as made without prejudice save as to costs.

On appeal, the issue was whether a letter headed only “without prejudice” could properly be disclosed and relied upon for costs.

1. Appeal allowed. The letter of 21 November 2017 was headed only “without prejudice”. It did not state that it was without prejudice save as to costs. Nor did it contain an equivalent reservation or indicate that rejection might have costs consequences.
2. The references in the letter to avoiding the costs of a site visit and trial, and to each party bearing its own costs if the offer were accepted, did not make the opposite consequence obvious if it were rejected. Those features went no further than an ordinary without prejudice settlement offer.
3. The offer should therefore not have been disclosed. The First-tier Tribunal should not have treated it as without prejudice save as to costs. Ms Gilchrist’s reasons for refusing it were immaterial, because the offer could not be used in determining costs.
4. The Upper Tribunal re-made the costs order. C & C had been substantially successful, but Ms Gilchrist had succeeded concerning the pink land. The only defective element of the First-tier Tribunal’s carefully reasoned order was the increase to full costs after the offer. Ms Gilchrist was accordingly ordered to pay half of C & C’s First-tier Tribunal costs, assessed on the standard basis if not agreed.
5. The stay of the First-tier Tribunal costs assessment would expire seven days after this decision. Ms Gilchrist was also ordered to pay £16,421.59 on account within 28 days, since C & C’s entitlement to half of its costs was undoubted and should not be withheld during a prolonged assessment.

• Upper Tribunal (Lands Chamber): Allowed Ms Gilchrist’s appeal from the First-tier Tribunal’s costs decision and re-made the costs order.
• First-tier Tribunal (Property Chamber, Land Registration): By a costs decision dated 19 December 2018, ordered Ms Gilchrist to pay half of C & C’s costs before 12 December 2017 and all costs thereafter, relying on the settlement offer.