Mann & Ors v Transport for London

Should this court overturn the decision of the Upper Tribunal (Lands Chamber) (“the Tribunal”) not to award successful claimants their costs of pursuing claims for compensation under Part 1 of the Land Compensation Act 1973 on the indemnity basis, where the compensation awarded to them had exceeded offers of settlement made by them before the hearing? That is the essential question in this appeal.

The appellants, Mr David Mann and 15 others, appeal against the decision of the Tribunal (Mr P.D. McCrea F.R.I.C.S.), in its “Costs Addendum” dated 5 October 2016, to award them the costs of their claims under Part 1 of the 1973 Act for compensation for depreciation in the value of their properties resulting from the use of public works comprised in the Coulsdon Inner Relief Road, on the standard basis. The respondent is the responsible authority, Transport for London (“TfL”).

The relief road was constructed to relieve congestionon the A23 trunk road, by-passing Coulsdon town centre and leaving the old Brighton Road in place for local traffic. Construction was completed in December 2006.The valuation date was 19 December 2007. There were originally 19 claimants, all of them owners of properties close to the relief roadand the London to Brighton railway line. They contended thatthe value of their properties had been depreciated, mainly by noise caused by traffic using the relief road. By the time of the hearing in January 2016 there were 12 live references before the Tribunal. In its decision, dated 5 April 2016, the Tribunal said it was “persuaded that the increases in noise which the claimants each described, and which are borne out in the undisputed L_A10 data, have had a depreciating effect on values, as shown by the limited valuation evidence”, and that “road noise increased in volume, and changed in character, to a sufficient degree to have a depreciating effect on the market value of the elevated claim properties, in general terms” (paragraph 108). It determined compensation for each of the claim properties at levels between £3,000 and £13,000 (paragraph 120).

The claimants’ case, broadly, had been that their properties had suffered a depreciation in value of 5%, and, in the case of one property, 1.5%. TfL maintained that none of the properties had suffered any depreciation in value. At the hearing 10 of the claimants gave evidence, and the Tribunal also heard expert noise evidence and expert valuation evidence on either side.

Offers to settle had been made by all 19 claimants in letters dated 8 January 2015, open for acceptance until 29 January 2015, all of them headed “Without Prejudice Save as to Costs”. Each offer was made on the basis that TfL would pay a specified sum “in full and final settlement of the claim for compensation … plus interest …”. 18 of them were for compensation for a depreciation in value of 3.25%, plus costs on the standard basis; the other was for a depreciation in value of slightly less than 1%, again plus costs. Each offer was alsomade expressly on this basis:

“The Claimant intends to rely upon this offer in relation to the issue of costs and will be inviting the Upper Tribunal to make an order for costs to be paid on the indemnity basis in the event that the Claimants beat this offer at trial.”

The offers were repeated in identical terms on 2 November 2015, again open for acceptance for 21 days.

After the offers were made, three of the claimants abandoned their claims. Four settled their claims: one at the offer level, in February 2015; three below the offer levels, in August and November 2015. The other 12 claimants succeeded in their claims before the Tribunal; 11 of them were awarded compensation for a depreciation in value of 4%, beating their offers by a small amount, and one was awarded compensation for a depreciation in value of 1%, again beating the offer, but only by a very small amount.

Having received submissions on costs, and for the reasons it gave in its “Costs Addendum”, under the heading “Disposal”, the Tribunal ordered that TfL was to pay the individual costs of the 16 successful claimants (paragraph a)); that the three claimants who withdrew their claims were to pay TfL’s individual costs of their claims and a defined proportion of TfL’s common costs up to the date of their withdrawal(paragraph b)); that TfL was to pay a defined proportion of the common costs of the consolidated references(paragraph c)); and that TfL was to pay the surveyors’ fees of the successful claimants (paragraph d)). In paragraph e) it ordered:

“e)

The costs referred to in paragraphs a)-d) above shall be assessed by the Registrarof the Lands Chamber on the standard basis in the absence of agreement.”

TfL was to make a payment on account of costs of £350,000 within 14 days (paragraph f)).

Permission to appeal was granted only on ground 1, which asserts that the Tribunal “erred in law in deciding that the costs of the successful Claimants should be assessed on the standard rather [than] the indemnity basis”. In granting permission, Longmore L.J. observed that “[the] question whether indemnity costs is an available option to the Lands Tribunal in a case where a claimant has made an offer which is rejected and then recovers a greater amount is an important point of practice which should be considered by this court”.

Two issues arise from the oral and written submissions presented to us:

Section 29 of the Tribunals, Courts and Enforcement Act 2007 provides:

“29(1) The costs of and incidental to –

…

(b)

all proceedings in the Upper Tribunal,

The relevant Tribunal shall have full power to determine by whom and to what extent the costs are to be paid.

Subsections (1) and (2) have effect subject to Tribunal Procedure Rules.”

Rule 2(1) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 (S.I. 2010/2600), as amended, (“the Rules”) states that “[the] overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly”. Rule 2(3) requires the Tribunal to “give effect to the overriding objective when it … (a) exercises any power under these Rules …”. Rule 2(4) requires parties “(a) [to] help the Tribunal to further the overriding objective …”.

The Tribunal’s jurisdiction to make orders for costs is provided for in rule 10, as amended by the Tribunal Procedure (Amendment No.3) Rules 2013 (S.I. 2013/1188). Rule 10 states:

“Orders for costs

10.

– (1) The Tribunal may make an order for costs on an application or on its own initiative.

(2)

Any order under paragraph (1) –

(a)

may only be made in accordance with the conditions or in the circumstances referred to in paragraphs (3) to (6);

(b)

must, in a case to which section 4 of the [Land Compensation Act 1961] applies, be in accordance with the provisions of that section.

(3)

The Tribunal may in any proceedings make an order for costs –

(a)

under section 29(4) of the 2007 Act (wasted costs) and for costs incurred in applying for an order for such costs;

(b)

if the Tribunal considers that a party or its representative has acted unreasonably in bringing, defending or conducting the proceedings;

(c)

in the circumstances to which paragraph (14) refers.

…

(6)

The Tribunal may make an order for costs in proceedings –

…

(b)

for injurious affection of land;

…

…

(8)

In proceedings to which paragraph (6) applies, the Tribunal must have regard to the size and nature of the matters in dispute.

…

(12)

The amount of costs to be paid under an order under this rule may be determined by –

(a)

summary assessment by the Tribunal;

(b)

agreement of a specified sum by the paying person and the person entitled to receive the costs (the “receiving person”); or

(c)

detailed assessment of the whole or a specified part of the costs (including the costs of the assessment) incurred by the receiving person –

(i)

on the standard basis; or

(ii)

on the indemnity basis, if so specified in the costs order, by the Tribunal or by the Senior Courts Costs Office or by a county court;

and the Civil Procedure Rules 1998 shall apply, with necessary modifications, to that application and assessment as if the proceedings in the Tribunal had been proceedings in a court to which the Civil Procedure Rules 1998 apply.

(13)

The Tribunal may order an amount to be paid on account before the costs are assessed.

… .”

Those provisions in the Rules are amplified in paragraph 12, “Costs”, of the Upper Tribunal (Lands Chamber) Practice Directions (“the Practice Directions”), which states:

“12.

Costs

…

12.2.

Exercise of discretion in awarding costs

Costs are in the discretion of the Tribunal … . Subject to what is said below the discretion will usually be exercised in accordance with the principles applied in the High Court and county courts. Accordingly, the Tribunal will have regard to all the circumstances, including the conduct of the parties; whether a party has succeeded on part of their case, even if they have not been wholly successful; and admissible offers to settle. The conduct of a party will include conduct during and before the proceedings; whether a party has acted reasonably in pursuing or contesting an issue; the manner in which a party has conducted their case; whether or not they have exaggerated their claim …

12.3.

The general rule for costs

1)

The general rule is that the successful party ought to receive their costs. …

2)

Particular rules, however, apply by virtue of section 4 of the Land

Compensation Act 1961. Under this provision, where an acquiring

authority has made an unconditional offer in writing of compensation and the sum awarded does not exceed the sum offered, the Tribunal

must, in the absence of special reasons, order the claimant to bear their own costs thereafter and to pay the post-offer costs of the acquiring authority. …

…

12.4.

Standard basis and indemnity basis

The Tribunal will normally award costs on the standard basis. On this basis, costs will only be allowed to the extent that they are reasonable and proportionate to the matters in issue, and any doubt as to whether costs were reasonably incurred or reasonable and proportionate in amount will be resolved in favour of the paying person. Exceptionally the Tribunal may award costs on the indemnity basis. On this basis, the receiving party will receive all their costs, except for those which have been unreasonably incurred or which are unreasonable in amount, and any doubt as to whether the costs were reasonably incurred or are reasonable in amount will be resolved in favour of the receiving party.

…

12.7.

Offers to settle

1)

In any proceedings before the Tribunal any party may make an offer to any other party to settle all or part of the proceedings or a particular issue on terms specified in the offer. Neither the offer nor the fact that it has been made may be referred to at the hearing if it is marked with ‘without prejudice save as to costs’ or similar wording, or if it is said to be a ‘Calderbank’ offer.

2)

… Offers should … state whether or not the offer is open for acceptance indefinitely or for a specified period of time. An offer … should also state whether or not it includes agreement to pay the other party’s costs and either the amount or the basis of those costs.

3)

... The Judge or Member hearing the case will not see the offer ... or be informed of its existence until after the proceedings have been determined. If requested by a party to do so, the Judge or Member may then consider the offer, when considering the question of the costs of the proceedings.

...”.

In the parties’ submissions on costs to the Tribunal there was disagreement on two issues: first, the basis of assessment, the claimants contending for the indemnity basis, TfL for the standard basis; and secondly, whether TfL should pay all the “common costs”, as the claimants maintained, or only a specified fraction of those costs, as TfL argued. We are concerned only with the Tribunal’s approach to the first of those two issues.

The Tribunal acknowledged (in paragraph 128 of its “Costs Addendum”) that “[in] the event, each successful claimant was awarded (or received on withdrawal) a greater sum in compensation than they had offered to accept on 8 January and 3 November 2015”.

A summary of the submissions made on either side was then set out (in paragraphs 129 to 135):

“129.

In support of his submission that indemnity costs should be awarded Mr Burton [for the claimants] relied on the fact that TfL had refused to accept the sealed offers, and had refused to recognise the ultimately successful claims, forcing the claimants to trial. The difference between the indemnity basis and standard basis was a real one, and if costs were not awarded on an indemnity basis the claimants would be exposed to the risk of a significant shortfall between the costs they would recover from TfL, and the fees they are obliged to pay to their own legal representatives. He relied upon the principles of the Civil Procedure Rules, and an agreed position in Livesey v Lancashire County Council [2014] UKUT 0501 (LC).

130.

On behalf of TfL Mr [Joshua] Munro submitted that indemnity costs were exceptional, and reflected unreasonable conduct to a high degree. He relied on [Kiam v MGN Ltd. (No.2)][2002] EWCA Civ 66 to support his contention that the refusal of offers is not unreasonable conduct. An indemnity costs order would be wholly inappropriate on the facts of this case. The claimants had changed their evidence and their case after the offers were made. … These changes of case post-dated the offers, and justified a detailed assessment on the standard basis, at which it could be determined whether the changes of evidence had caused additional costs to be incurred.

131.

In response Mr Burton submitted that it had been necessary for Mr English to revisit his evidence following Mr Lawrence’s report, which included entirely new modelling … . It was quite proper, he submitted, for Ms Veness to revisit her report once Mr English had updated his evidence.

132.

Kiam, on which Mr Munro relied, concerned a respondent’s offer to settle an appeal, made without prejudice subject to costs, which was not a Part 36 offer and was not expressed to be subject to indemnity costs if beaten. …

133.

… If Mr Munro was right, the claimants would find themselves no better off as to costs than had they made no offers at all – a point which Kiam addressed.

134.

In addition, Mr Burton submitted, Mr Munro’s submissions did not have regard to the fact that the Tribunal’s Rules and Practice Direction do not offer the claimant a choice between a ‘Part 36’ offer and a more traditional offer made without prejudice save as to costs. A claimant who wished to encourage settlement by the threat of securing an order for indemnity costs if he beats his offer, could put himself approximately in the position of a first instance claimant under the former CPR r.36.21 discussed in Kiam and [Reid Minty v Taylor [2001] EWCA Civ 1723] by making the terms of the offer, including as to indemnity costs, entirely clear following the principles set out in [Trustees of Stokes Pension Fund v Western Power (South West) Plc [2005] 1 W.L.R. 3595].

135.

Mr Burton submitted that by making the offers, the claimants were doing all they could within the framework set by the Tribunal rules and Stokes to make offers equivalent to Part 36 offers. By refusing those offers, and making no offer of its own, TfL had opened itself up to an order for indemnity costs from the expiry of the offers. If the authority was correct, the claimants, who had succeeded at trial, a year after the offers were first made, and three months after they had been repeated, would be no better off in relation to the costs of the claim than if they had made no offers at all, which was the mischief identified in Kiam.”

Having set out the relevant provisions in section 29 of the 2007 Act, rule 10 of the Rules, and paragraph 12 of the Practice Directions, the Tribunal stated its conclusions (in paragraphs 139 to 144):

“139.

It is clear from the above, especially paragraph 12.4 of the Practice Directions, that indemnity costs are only awarded in exceptional circumstances.

For the appellants, Mr Roger Mallalieu submitted that the Tribunal had wrongly applied a “test” requiring the claimants to show that TfL had acted “unreasonably” in not accepting their offers, and had thus failed properly to exercise its discretion as to costs. He acknowledged that CPR Part 36 had not been grafted on to the procedural regime for the Tribunal, and that there were no specific arrangements in the Rules for the making of offers to settle under a procedure parallel to that. But, he submitted, it is consistent with the “overriding objective” in rule 2, and implicit in paragraph 12 of the Practice Directions, that the making of such offers is supported in the Tribunal, as it is in civil proceedings. Both in civil litigation and in disputes before the Tribunal there is a sound basis in “policy” for encouraging claimants to make offers of settlement, and, in appropriate cases, for costs to be awarded to them on the indemnity basis when such an offer is not accepted and is then bettered “at trial”. To set up a test that a “defendant” – here TfL as responsible authority – must have acted “unreasonably” if a claimant is to be awarded costs on the indemnity basis would remove the incentive for claimants to make offers to settle, creating an imbalance between the parties, and contrary to the “overriding objective”.

Here, Mr Mallalieu submitted, the Tribunal had misdirected itself on the concept – in paragraph 12.4 of the Practice Directions – of costs being awarded on the indemnity basis only “exceptionally”. InDymocks Franchise Systems (NSW) Pty. Ltd. v Todd [2004] UKPC 39 Lord Brown of Eaton-under-Heywood said (at paragraph 25(1)) that “[although] costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense”, and that “[the] ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order”. In a claim before the Tribunal, Mr Mallalieu submitted, it would be sufficiently unusual to be regarded as “exceptional” that the claimant had made an offer complying with the requirements in Trustees of Stokes Pension Fund, stating his intention to seek indemnity costs if the offer was not accepted, and then beat it “at trial”. This was not to say that in such circumstances costs must always be awarded on the indemnity basis. It would still be necessary for the Tribunal to take into account all the circumstances, and to satisfy itself that its decision would further the “overriding objective”. The Tribunal’s error here, Mr Mallalieu argued, was to think thatin the absence of unreasonable conduct an award of costs on the indemnity basis could not be justified.

The decision of this court in Kiam, submitted Mr Mallalieu, does not support theTribunal’s conclusion that, if costs were to be awarded on the indemnity basis, the claimant’s offer had to have been “unreasonably” refused (see the judgment of Simon Brown L.J., in particular at paragraphs 3, 5, 7, 8, 12 and 13; his judgment in McPhilemy v Times Newspapers Ltd. (No.2) [2002] 1 W.L.R. 934, at paragraph 28; and the judgment of Sir Geoffrey Vos C. in OMV Petrom SA v Glencore International AG [2017] 1 W.L.R. 3465, at paragraph 18). In civil proceedings, the specific rules on the effect of offers made under CPR Part 36 distinguish between the position of a claimant who beats his own offer and will normally be awarded his costs on the indemnity basis from the date on which the relevant period expired (CPR 36.17(4)), and the position of a defendant, who will normally get his costs on the standard basis, unless the court considers it unjust (CPR 36.17(3)). In Kiam the court was concerned with a situation in which the offer was treated as being, in effect, a defendant’s offer (see the judgment of Simon Brown L.J., at paragraphs 5 and 6; and the judgment of Chadwick L.J. in McPhilemy v Times Newspapers Ltd., at paragraph 3). The court did not reject the concept that, if a claimant does better at trial than his offer to settle, he ought generally to be awarded his costs on the indemnity basis, and that this is conducive to the making of such offers and the settlement of cases. Nor did it doubt the observation made by Kay L.J. in Reid Minty (at paragraph 37) that “[the] approach of the Civil Procedure Rulesis a relatively simple one: namely, if one party has made a real effort to find a reasonable solution to the proceedings and the other party has resisted that sensible approach, then the latter puts himself at risk that the order for costs may be on an indemnity basis”. As Simon Brown L.J. said in Kiam (at paragraph 8):

“8.

If the claimant thought that, even if he were to make and then beat an offer, he was going to get no more than his costs on the standard basis, why would he make it? … His position is, in short, quite different from that of the defendant who plainly has every incentive to make a settlement offer … irrespective of the basis on which any costs order will be made.”

An essential proposition in Mr Mallalieu’s argument was this. Where a “claimant” makes an admissible offer to settle and the “defendant” does not accept that offer, the case goes to trial and the “claimant” equals or betters the offer, then, “absent other relevant factors, justice will commonly require that the claimant is awarded costs on the indemnity basis for the period following the expiry of the relevant offer”.

For TfL, Mr Munro submitted that the Tribunal’s approach was impeccable. In most cases before the Tribunal it would only be “unreasonable” behaviour that would be so out of the norm as “exceptionally” to justify an award of costs on the indemnity basis. In this case the well-established principles governing indemnity costs described by Coulson J., as he then was, in The Governors and Company of the Bank of Ireland v Watts Group Plc [2017] EWHC 2472 (TCC) (at paragraphs 5 to 9) applied. One of those principles is that indemnity costs are appropriate where the conduct of a paying party is “unreasonable to a high degree” and “not … merely wrong or misguided in hindsight” – as Simon Brown L.J. put it in Kiam, (in paragraph 12 of his judgment). Simon Brown L.J. went on to say (at paragraph 13) that “[it] is very important that the Reid Minty case … should not be understood and applied for all the world as if under the Civil Procedure Rules it is now generally appropriate to condemn in indemnity costs those who decline reasonable settlement offers” (see also the judgment of Teare J. in Shackleton and Associates Ltd. v Shamsi and others [2017] 2 Costs L.O. 169, at paragraph 27). In this case, Mr Munro submitted, TfL’s refusal of the claimants’ offers was not unreasonable, and did not justify an order for costs on the indemnity basis.

I cannot accept Mr Mallalieu’s argument that the approach adopted by the Tribunal in determining the application for costs was wrong in principle.

In an appeal such as this, where the Tribunal’s exercise of its discretionin making an award of costs under the Rules and the Practice Directions is challenged, the court should not interfere with the Tribunal’s decision unless the approach it has adopted was wrong in some obvious respect. Here it was not.

The Tribunal’s discretion as tocosts is a deliberately broad discretion, exercisable in a wide variety of proceedings. The Rules do not contain provisions corresponding to those in the self-contained procedure in CPR Part 36, “Offers to Settle”, including the provisions for “Costs consequences following judgment” in CPR 36.17. If it had been thought necessary or desirable to import the provisions of CPR Part 36 into the Rules, or to insert into the procedural framework of the Tribunal a more refined code for determining applications for costs where offers to settle have been made by one party or the other before the hearing, this could easily have been done. It was not done – either when the Rules were originally made or when they were amended in 2013.

Rule 10 indicates the circumstances in which the Tribunal “may make an order for costs …” (rule 10(1)). Paragraph 12.2 of the Practice Directions emphasizes that “[costs] are in the discretion of the Tribunal”. Although it says that “… the discretion will usually be exercised in accordance with the principles applied in the High Court and county courts”, and is framed in terms similar to those of CPR 44.2, “Court’s discretion as to costs”, it does not incorporate into the regime for awards of costs in the Tribunal the entire procedural scheme for awards of costs in civil proceedings. It confirms that “the Tribunal will have regard to all the circumstances, including the conduct of the parties … and admissible offers to settle”, and that a party’s conduct will include “conduct during and before the proceedings” and “whether a party has acted reasonably in pursuing or contesting an issue” and “the manner in which a party has conducted their case”. Paragraph 12.4, which deals specifically with awards of costs being made either on the standard basis or on the indemnity basis, is also in very general terms. It does not lay down any fixed principles for making an award of costs on one basis or the other, beyond stating the Tribunal will “normally award costs on the standard basis” but that “[exceptionally] the Tribunal may award costs on the indemnity basis”. It thus accepts that an award of costs on the indemnity basis is an available option. But it does not set criteria to distinguish the normal case from the exceptional. This is left for the Tribunal to judge, in the light of the particular circumstances of the case before it. Paragraph 12.7, which deals specifically with offers to settle, while stating that “[if] requested by a party to do so, the Judge or Member may … consider the offer, when considering the question of the costs of the proceedings”, does not prescribe any particular approach to that task.

The essential complaint here is that the Tribunal misdirected itself by adopting a “test” of “unreasonableness”, or “unreasonable conduct”, in determining whether, “exceptionally”, it should make an award of costs on the indemnity basis. The complaint is not, and could not be, that the Tribunal was wrong to ask itself whether there was some exceptional feature in the case that would justify such a decision. It directed itself appropriately, in the light of the guidance in paragraph 12.4 of the Practice Directions, that “indemnity costs are only awarded in exceptional circumstances” (paragraph 139 of the “Costs Addendum”). It plainly understood that a decision to award costs on the indemnity basis lay within its discretion, but that for such a decision to be made there would generally have to be something “exceptional” to warrant it. The question for us, therefore, is whether it fell into error in the approach it took when considering whether the circumstances in this case were “exceptional”, such as justify costs being awarded on the indemnity basis.

I cannot accept that the Tribunal erred in that way. It rightly put to one side the submission made on behalf of the claimants that they had been “forced” to put their offers in the way they did (paragraph 140). And it rightly rejected the suggestion that the claimants could oblige it to award costs on the indemnity basis by stating in those offers their intention to apply for costs on that basis. As it understood, the offers made by the claimants did not override its discretion as to costs (paragraph 142). It had regard to the particular circumstances of this case, and it concentrated on the conduct of the parties. It was entitled to do this. Indeed, if it had not done so it would have been departing from the guidance in paragraph 12.2 of the Practice Directions.

When the Tribunal said that, to succeed in their application for indemnity costs, the claimants “would need to satisfy [it] that TfL had acted unreasonably in not accepting the offers” (paragraph 143), it was not seeking to formulate a “test” to be applied indetermining such applications. It was simply asking itself whether TfL’s conduct in these proceedings – in particular, its conduct in not accepting the claimants’ offers to settle – was, in all the circumstances, such as to take the case out of the normal and into the exceptional, and to justify costs being awarded “exceptionally” on the indemnity basis. Had TfL’s conduct been so lacking in reasonable good sense as to have that result? The Tribunal’s answer was that it had not. It followed that this was not a case that fell into the category of the exceptional, and not a case, therefore, in which an award of costs on the indemnity basis would generally be justified. As an approach to determining the basis upon which costs should be awarded, this, in my view, was sound. It was not wrong in principle.

The Tribunal was right to conclude that the claimants were attempting, in effect, to introduce into the procedural regime of the Tribunal a procedure equivalent to that in CPR Part 36. The significant point here was not whether the claimants were “offering any concession”. It was whether they were, as the Tribunal said, “purporting to introduce a sanction which the Tribunal’s rules and practice directions do not provide for”. The Tribunal clearly had in mind that the procedure in CPR Part 36 had not been replicated in the Rules or in the Practice Directions. As it said, parties to a reference are not free “unilaterally to appropriate the much more elaborate carrot and stick regime provided by CPR Part 36”. This does not betray a flawed approach. The fact that the claimants’ offers were made, on both occasions, in a form modelled on a Part 36 offer in civil proceedings did not constrain the Tribunal to adopt the Part 36 procedure in determining the basis upon which costs should be awarded.

As Mr Munro submitted, however, the absence in the Rules and the Practice Directions of a procedure for making offers to settle under a scheme equivalent to CPR Part 36 does not render a claimant’s offer futile. A timely and realistic offer by a claimant can bring about a sensible settlement, with – potentially – considerable saving in costs on both sides. For the claimant, the making of such an offer, if it is accepted, can lead to a successful outcome for him, which avoids the risk, uncertainty and delay entailed in pursuing his claim to a hearing. This will still be so in spite of there being no presumption that his costs will be awarded on an indemnity basis if his offer is not accepted and he succeeds in bettering it after the hearing.

Finally here, I do not think that the authorities to which counsel referred, though they illustrate principles that apply in civil litigation, cast any doubt on the lawfulness of the approach adopted by the Tribunal in this case, under the Rules and the Practice Directions. The Tribunal’s approach, in the procedural context relevant to the costs decision that it was required to make, was, in my view, appropriate and lawful.

Mr Mallalieu’s second and alternative argument was that in any event the circumstances of this case made it necessary for the Tribunal to award costs on the indemnity basis. Even if it could only make an award of costs on the indemnity basis if TfL had acted “unreasonably” in not accepting the claimants’ offers, it had not exercised its discretion as to costs as it should – because TfL plainly had indeed acted unreasonably (see, for example, the judgment of Nugee J. in Bastionspark LLP v Commissioners for HMRC [2016] UKUT 425 (TCC), at paragraph 20).

Mr Mallalieu submitted that the Tribunal had wrongly equated unreasonableness with the pursuit of a case that was “patently hopeless” and had not been “argued perfectly properly” (paragraph 143 of the “Costs Addendum”). The nature of the unreasonableness here was different. The claimants’ offers were indeed a “concession” – for they represented a lower level of compensation than had been claimed. As for the “sanction”, the claimants were merely asserting their right to seek indemnity costs under the Rules and the Practice Directions. TfL had not accepted reasonable offers, which would have required only modest compensation to be paid to the claimants. The consequence was that the claims went to a hearing, with a far greater burden in costs on both sides. The offers had been made well before the hearing, and were not accepted at that stage. They had been repeated several months later, but once again not accepted. The fact that TfL had been given a second chance to accept them only reinforced the conclusion that an award of costs on the indemnity basis was justified (see the judgment of David Richards J., as he then was, in Franks v Sinclair [2006] EWHC 3656 (Ch), at paragraph 28). The Tribunal saw nothing in TfL’s conduct “to attract any sort of sanction or mark of disapproval”. But this, Mr Mallalieu submitted, was not a prerequisite for an award of costs on the indemnity basis (see the judgment of May L.J. in Reid Minty, at paragraphs 9 and 27 to 32). The Tribunal had also overlooked points made in the claimants’ written submissions dated 20 April 2016 and 4 May 2016 – in particular, TfL’s refusal to make offers of its own and its reliance on a noise assessment prepared in 2010, which had contained many mistakes.

Mr Munro submitted that the Tribunal’s conclusions were unimpeachable. TfL’s conduct in the proceedings had been reasonable throughout. In each of these claims the diminution in value contended for had been modest – no more than 5% – which could have been regarded as “de minimis”. The compensation obtained was only about £200,000. The claims had all been funded by conditional fee agreements with a 100% success fee. The total costs claimed by the claimants was £1,350,000. The argument for indemnity costs was, in truth, an attempt to preclude those costs being reduced as disproportionate – which plainly they were.

Again, I cannot accept Mallalieu’s submissions. It is not for this court to revisit the Tribunal’s exercise of its discretion as to costs by going behind the conclusions it reached, unless those conclusions are demonstrably unsound. In this case they are not demonstrably unsound. Once it is accepted that the Tribunal’s approach was, in principle, appropriate and lawful, as in my view it was, I cannot see how it can be suggested that the outcome should have been different.

Having heard the claims and formed its view on the strength of the evidence and submissions on either side, the Tribunal was in the best position to judge whether TfL had conducted itself unreasonably. None of its conclusionson TfL’s case and conduct can be criticized. They were all within the scope of conclusions it could properly reach.It was entitled to conclude, as it did, that TfL’s case was “not patently hopeless”, and that the case had been “argued perfectly properly” – relevant considerations in judging whether TfL had behaved unreasonably. It was also entitled to conclude that “TfL’s general conduct of the references” was not such as to “attract any sort of sanction or mark of disapproval” (paragraph 143 of the “Costs Addendum”). It did not accept the contention that TfL’s conduct had been unreasonable, or that it had acted unreasonably in not accepting the claimants’ offers. It acknowledged that TfL “might be said to have taken an additional risk in refusing to accept the offers …”. But to take such a risk was not, in the circumstances, unreasonable. Given the scale of these claims and the nature of the matters in dispute, one can well see why the Tribunal took that view. Nor did it accept that TfL should have made offers of its own. It obviously rejected the contention that TfL could not reasonably contest the claims with the evidence it had produced and its counsel’s submissions at the hearing. When dealing with the claimants’ application for costs, it will have had well in mind the strength and content of the evidence on either side, including the expert evidence on noise – which is not a matter for this court to consider afresh.

I therefore reject the argument that the Tribunal was wrong to conclude as it did.

For the reasons I have given, I would dismiss this appeal.

I agree.