Stuart John Pilbrow v Nicola Jane Eileen Glanville & Anor

In a costs appeal, a tribunal must give proper weight to unreasonable conduct that causes a party to incur costs in litigation which could have been avoided. Where respondents possess a complete defence and could and should disclose it at an early stage, their inadvertent failure to do so may justify a costs order against them.

The possibility that the claimant might have lost on other grounds is irrelevant where the undisclosed defence made success impossible and caused further pointless litigation. A decision which gives insufficient weight to that conduct and relies on the claimant’s untested prospects of success may be irrational.

The appellant applied to HM Land Registry to be registered as proprietor of adjoining registered land by adverse possession. The respondents objected, and the matter was referred to the First-tier Tribunal under the Land Registration Act 2002.

After proceedings had continued for approximately a year, the respondents disclosed that the land was subject to a trust. Under paragraph 12 of Schedule 6 to the Act, that created a complete defence. The appellant withdrew his application. The First-tier Tribunal made no order for costs, accepting that the respondents could and should have disclosed the trust earlier, but considering that the appellant might nevertheless have lost at trial.

The central issue was whether that consideration was relevant and whether the costs decision was irrational.

1. The appeal was allowed. The First-tier Tribunal’s costs decision was set aside and replaced by an order that the respondents pay the appellant’s costs of the First-tier Tribunal proceedings, to be summarily assessed on the standard basis if not agreed.
2. Although costs are a matter for the First-tier Tribunal’s discretion, the Upper Tribunal may intervene where the tribunal exceeds the generous bounds of that discretion, including by taking an irrelevant consideration into account or reaching an irrational decision.
3. The respondents could and should have disclosed the trust at the outset, or at least when the proceedings progressed before the First-tier Tribunal. Their omission was inadvertent, but they were trustees and had a duty to be aware of the trust, its terms and the persons for whom they held the land.
4. The appellant’s untested prospects of success absent the trust were irrelevant. The case was not hopeless, and its merits had not been determined. The relevant fact was that the appellant could not succeed once the trust was disclosed, and had incurred time and costs in pointless litigation because the respondents failed to disclose a complete defence.
5. The First-tier Tribunal failed to give proper weight to the respondents’ unreasonable behaviour and was led astray by the irrelevant consideration that the appellant might ultimately have lost. Merely relieving the appellant from liability for the respondents’ costs was inadequate. The Upper Tribunal ordered standard-basis costs because neither party had made submissions on indemnity costs and it was disproportionate to prolong the proceedings for that purpose.

• Upper Tribunal (Lands Chamber): The appeal from the First-tier Tribunal’s costs order was allowed. The order was set aside and substituted with an order for the respondents to pay the appellant’s First-tier Tribunal costs.
• First-tier Tribunal (Property Chamber): Following withdrawal of the adverse-possession application, the tribunal made no order for costs.