Simon Nelson v Southern Electric Power Distribution

This is a decision on costs following the Tribunal’s determination of compensation in Nelson v Southern Electric Power Distribution [2025] UKUT 0213 (LC) dated 1 July 2025 (‘the Compensation Decision’). The payment of compensation, which I determined at £47,250, arose out of a claim by Mr Simon Nelson following the grant of a necessary wayleave by the Secretary of State to Southern Electric Power Distribution (‘SEPD’) over Mr Nelson’s property, Dale House, Anna Valley, Hampshire.

The parties have now made submissions on costs. Mr Nelson represented himself, SEPD were represented by CMS Cameron McKenna Nabarro Olswang LLP (“CMS”).

A case management hearing took place in March 2024, following which directions were given, with the substantive hearing listed for 19 and 20 September 2024. The parties jointly requested a stay to enable them to pursue Alternative Dispute Resolution, and by an Order dated 30 May 2024, the claim was stayed for two months, and the hearing re-listed for 20and 21 November 2024. It appears that the parties remained in negotiations until a few months before the eventual hearing in June 2025.

Various communications took place over the course of summer 2024. Some of this included the Tribunal being copied into correspondence between the parties, including reference to without prejudice material; this was filtered out by the Registrar, and I did not have sight of it.

On 8 November 2024, with the hearing a matter of weeks away, the Tribunal received a joint application from the parties to stay the claim until 30 November, vacating the hearing scheduled for 20 November, and relisting it for the first available date from 1 December 2024.

On several occasions during these exchanges Mr Nelson referred to his understanding of the Tribunal Member’s comments at the March 2024 case management hearing, which he explained he understood to be an assurance that he would not financially be worse off from proceeding. On 13 January 2025, I directed that an email be sent the parties, the full text of which was:

“The Tribunal notes that in the parties' joint application for a stay dated 7 November 2024, it was indicated that terms to settle the claim had been agreed.

The claimant's email of 29 November indicated that the respondent had not provided 'a satisfactory undertaking for our legal representatives costs to be covered', which he said was 'against the directions of the tribunal which clearly stated that “we are supposed to be in no worse financial position after the grant of the wayleave”’, and that the hearing should be reinstated.

Costs are usually dealt with by the Tribunal in two parts. Costs incurred before the reference was made to the Tribunal are treated as part of the compensation which a person is entitled to if they have suffered a loss for which compensation is payable. Costs incurred in making the reference and after it has been commenced are dealt with at the end of the proceedings, when the unsuccessful party is usually ordered to pay the costs of the successful party, to the extent that they were reasonable incurred and were reasonable in amount. If the claimant achieves a better outcome in terms of compensation and costs than he has previously been offered by the respondent, then he will be the successful party and will be entitled to his costs of the reference. If he has previously been offered more than he eventually recovers, he will be the unsuccessful party and will have to pay the respondent’s costs incurred after the offer was made.

It is important that the claim is now not simply proceeding because the claimant is under the impression that he will be able to recover all of his costs, come what may. If he is the successful party he will be entitled to recover his reasonable costs; if he is not the successful party, he may have to pay part of the respondent’s costs. The Tribunal does not know what offers have been made in the proceedings - and it is important that it remains unaware until after the Tribunal's decision has been published.

If the parties have not reached agreement on all issues, including pre-reference costs and liability for the costs of the reference, the Tribunal will determine the remaining issues at a hearing.

The hearing of the claim shall now be rearranged, but the Tribunal is keen that the claimant is not proceeding under a misapprehension.

The parties are now directed to provide dates to avoid in March and April 2025, and a current estimate of the number of days that will be required for the hearing. Once the hearing date has been set, the Tribunal will arrange a site visit.”

Mr Nelson acknowledged receipt, commenting that “The claim would not be proceeding only on the basis of costs and we fully understand the rationale regarding costs and at which stage they come into play and the thresholds needed to qualify for costs.”

By this point SEPD’s expert, Mr Colin Smith, had retired and an application was made to replace him with a colleague. By an Order of 12 March 2025, I gave permission for Mr Smith to be replaced, with his replacement to file a report by no later than 4 April, in which the new expert was to confirm whether they agreed with the assessment of Mr Smith, and if not the extent to which they differed, in which case Mr Davies, for the Mr Nelson, could file a supplementary report in response. The hearing was relisted for 11 and 12 June 2025.

On 3 April, 24 hours before the new expert’s report was due, solicitors for SEPD made an urgent application to amend the hearing timetable. Because that application included reference to the parties’ negotiations, it was dealt with by the Deputy President, who in accordance with Rule 6(6) of the Tribunal’s Rules (of which more below), gave Mr Nelson 10 days to respond to the application.

In an email of 7 April, Mr Nelson refused to agree with SEPD’s request for additional time because the parties were continuing to negotiate, and made an application to strike out SEPD’s case. By an Order of the same day, SEPD were directed to submit a draft of its new expert report, with the application to rely on it not to be considered until after 30 April, that being the date which both parties had indicated they still intended to complete an agreement disposing of the reference by consent.

The draft report was submitted, and by an Order of 9 May, I granted permission for SEPD to rely upon it, except for a section which included new evidence that amounted to a ‘second reply’ to Mr Davies’s evidence. I refused Mr Nelson’s application to strike out SEPD’s case.

Mr Nelson made an application for permission to appeal against that Order, which I refused on 12 May 2025. He subsequently made a further application to the Court of Appeal for permission to appeal. The Court of Appeal refused permission to appeal on 6 June 2025.

The substantive hearing followed on 11 June, which resulted in the Compensation Decision of 1 July.

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

The relevant Tribunal Procedure Rules, to which the powers in section 29 are made subject, are the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 (“the Rules”), rule 2(1) of which states that:

Rule 2(3) requires the Tribunal to:

As amended, Rule 10 provides, so far as relevant (and with my emphasis):

“Orders for costs

10.

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

The compensation payable to Mr Nelson was determined under Paragraph 7 of Schedule 4 to the Electricity Act 1989. As I indicated in the Compensation Decision (at [4]), under paragraph 7(4) of Schedule 4 to the 1989 Act, section 4 of the Land Compensation Act 1961 applies to the Tribunal’s determination of compensation. Accordingly, under Rule 10(2)(b), I must determine costs in accordance with that section. As far as relevant to this decision, it provides (again, with my emphasis):

“4.— Costs.

(A1) In any proceedings on a question referred to the Upper Tribunal under section 1 of this Act—

(a)

the following subsections apply in addition to section 29 of the Tribunals, Courts and Enforcement Act 2007 (costs or expenses) and provisions in Tribunal Procedure Rules relating to costs; and

(b)

to the extent that the following subsections conflict with that section or those provisions, that section or those provisions do not apply.

(1)

Where …—

(a)

the acquiring authority have made an unconditional offer in writing of any sum as compensation to any claimant and the sum awarded by the Upper Tribunal to that claimant does not exceed the sum offered; …

the Upper Tribunal shall, unless for special reasons it thinks proper not to do so, order the claimant to bear his own costs and to pay the costs of the acquiring authority so far as they were incurred after the offer was made or, as the case may be, after the time when in the opinion of the Upper Tribunal the notice should have been delivered.

...

(4)

The Upper Tribunal may in any case disallow the cost of counsel.

(5)

Where the Upper Tribunal orders the claimant to pay the costs, or any part of the costs, of the acquiring authority, the acquiring authority may deduct the amount so payable by the claimant from the amount of the compensation payable to him.”

Drawing together the relevant statutory provisions and Rules, in a claim for compensation under the Electricity Act 1989, the Tribunal has power to award costs. That power must be exercised in accordance with s.4 of the Land Compensation Act 1961, and to the extent that there is any conflict between s.4 of the 1961 Act, the Tribunal’s Rules, and the Tribunal’s general powers to award costs under section 29 of the 2007 Act, s.4 of the 1961 Act will prevail.

Both sides claim their costs.

SEPD relies on a written offer it made to Mr Nelson on 12 May 2025, offering to settle the claim at compensation of £50,000 plus a contribution to the fees of Mr Nelson’s expert, Mr John Davies, of £15,000. SEPD says that its costs of the reference were £184,303.80 plus VAT, and it claims costs incurred after the offer of just over £100,000 plus VAT, or in the alternative 30% of its costs of the reference.

Mr Nelson claims £48,375, comprising £21,850 for the cost of his expert Mr Davies, £25,749.38 for his own time (232.5 hours at £110.75 per hour), and £776.50 in disbursements.

In response, SEPD submits that if Mr Nelson is awarded the costs of his time, first, these should be limited to the time incurred up to the date of its offer to settle – considered below, and secondly that since no evidence of loss has been submitted, the amount awarded should be at £19 per hour, in line with the normal approach followed by the Tribunal, for example in my decision in Golf Café Bars Limited v West Yorkshire Combined Authority and Network Rail Infrastructure Limited [2021] UKUT 0048 (LC). It submits that the hours claimed by Mr Nelson and costs of copying are excessive given that SEPD prepared the hearing bundle, and that many hours were incurred in repetition of material already submitted. It appears to take no issue with Mr Davies’s fees.

SEPD says that while under Rule 10(2)(b) a costs order must be in accordance with s.4 of the 1961 Act, Rule 10(3)(b) is not displaced; it cannot have been the intention of Parliament to preclude an acquiring authority from also recovering costs which have been incurred through the unreasonable conduct of the claimant under Rule 10(3)(b), in relation to which the Tribunal retains a discretion. It asserts that Mr Nelson’s conduct has been unreasonable during the course of the reference, and that it should be awarded its costs at least in relation to the most egregious instances, including failing to complete a settlement deed which had been agreed at mediation, for which SEPD incurred costs of £62,362 plus VAT, plus £34,500 plus VAT since the abortive mediation. A further instance of Mr Nelson’s allegedly unreasonable conduct was his unsuccessful application to strike out the proceedings (for which SEPD incurred costs of £1,352).

I am not satisfied that Mr Nelson has behaved unreasonably.

The Tribunal’s powers are limited to the costs ‘of and incidental to’ the proceedings in the Tribunal, i.e. the reference. It has no power to deal with costs of the abortive mediation because it is confidential, unless the parties agreed that the cost of the mediation would be costs of the reference, which I have not been told they did. In any event, I cannot inquire into, or be told about, what went on in the mediation itself. Agreeing to mediate is not indicative of an unreasonable approach to the reference. What is clear is that the parties did not reach agreement. Nor can the Tribunal award the costs arising out of Mr Nelson’s application to the Court of Appeal, for which the parties must apply to the Court.

In assessing costs under the Electricity Act, I must proceed in accordance with s.4 of the Land Compensation Act 1961. SEPD relies upon s.4(1)(a) – that where the [compensating] authority have made an unconditional offer in writing of any sum as compensation to any claimant and the sum awarded by the Tribunal to that claimant does not exceed the sum offered, the Tribunal shall, unless for special reasons it thinks proper not to do so, order the claimant to bear his own costs and to pay the costs of the … authority so far as they were incurred after the offer was made.

The terms of s.4 invited the question: Was SEPD’s offer of 12 May 2025 ‘unconditional’? The terms of the offer were:

“Offer to Settle

1.

Total compensation to you in respect of the grant of a necessary wayleave: £50,000

2.

Payment of your professional fees:

a.

SEPD agrees to make payment of £15,000 in settlement of JLL’s professional fees

b.

For the avoidance of doubt, no part of this offer includes any contribution to or payment of your mediation fees and/or or any additional costs.

3.

Timing of payments: we are holding monies. As such, we will send these upon completion of the settlement agreement.

4.

Equipment: remains in situ on the Property by virtue of the necessary wayleave dated 7 July 2023

5.

Consent order withdrawing the Claim: Within 2 working days of acceptance of the offer, the parties shall enter into a consent order, in the form already drafted and ready for signature, detailing agreed compensation and payment of professional fees and the claim shall be withdrawn and CMS shall file that signed consent order with the Tribunal.”

The offer was said to be strictly time bound, and

“must be accepted no later than 3pm on Friday 16 May 2025, and that a settlement agreement documenting the offer must complete by 3pm on Friday 23 May 2025. As you are aware a settlement agreement is already in final form and so we anticipate making only minor amendments to this to reflect the change in the terms of this offer”

That offer of compensation was not unconditional. It was conditional first on Mr Nelson accepting £15,000 as a contribution towards his costs, rather than having them assessed by the Tribunal or paid in full. Secondly, it was conditional upon Mr Nelson signing a settlement agreement, the terms of which I do not know. Accordingly, it was not an offer which engages the consequences of s.4 of the 1961 Act.

The offer is not, however, irrelevant. On the contrary it is highly relevant but not because it compels the Tribunal to act in accordance with s.4. As the Tribunal’s Practice Directions explain (para 25.10), in assessing costs the Tribunal will have regard to admissible offers to settle. The offer was in excess of my award of compensation by £2,750 or 6%. Accordingly, Mr Nelson must pay the costs of SEPD in so far as they were incurred after a reasonable time had elapsed for consideration of the offer. Given the proximity of the hearing, in my judgment a reasonable time for Mr Nelson to consider the offer and decide whether to accept it was seven days and expired on 19 May. Mr Nelson is not entitled to his own costs after that date, and must pay SEPD’s.

Mr Nelson has provided a helpful time sheet. Of the 232.5 hours claimed for, 39.5 hours were for sending emails to the Tribunal and to CMS during the period between 18 October 2024 and 9 February 2025. They are claimable.

There is then a list of time spent on emails between 4 April 2025 and 10 July 2025. I allow from 4 April until 19 May, inclusive, which I calculate to be 41 hours.

There is then a global entry, said to be between 4 April and 12 June 2025, for time spent on ‘preparation for hearing, reading, filing, submissions, site visit/hearing’. This is not broken down by dates, but is said to be 132 hours in total. While the number of hours spent per day may well have increased as the hearing of 11 June became closer, in the absence of anything to the contrary I have divided this period pro-rata between 4 April and 19 May, which is claimable, and between 20 May and 12 June, which is not. This adds 86 hours of claimable time, bringing the total claimable hours to 167. I am satisfied that Mr Nelson did spend that time on preparing the case and that it was reasonable for him to do so.

As I confirmed in Golf Café Bars (at [8])the Litigants in Person (Costs and Expenses) Act 1975 applies to proceedings before the Upper Tribunal (section 1(1)(ba)) and it enables a litigant in person to recover sums in respect of any work done, and any expenses and losses incurred, by the litigant in or in connection with the proceedings to which the order relates. It permits a sum to be allowed in respect of any work done by a litigant in person in connection with the proceedings, whether or not they caused the litigant in person any pecuniary loss (see, for example, paragraph 22.2 of the Senior Courts Costs Office Guide).

In the civil courts, where a litigant in person has not proved that they have suffered loss as a result of the work they have done in the proceedings, such as having to take time off work unpaid, CPR 46.5(4)(b) (and the Practice Direction which supplements it) allows an amount to be awarded for the time reasonably spent on doing the work, limited to £19 per hour. It is appropriate for the Tribunal to adopt the same approach. Accordingly, I award 167 hours at £19 per hour, viz. £3,173.

There is no dispute over Mr Davies’ fees, at £21,850, which were incurred in full before 19 May, and are claimable.

As for disbursements, travel and accommodation, at £350 (which I assume was for the hearing, if it was connected with the mediation then I would not allow for the reasons given above) is not claimable as it post-dates 19 May. I allow the remaining £426.50 said to be for disbursements/printing/photocopying. SEPD prepared the bundle, but I assume the remaining costs were incurred when the reference was made, and shortly afterwards.

I therefore allow Mr Nelson’s costs up to 19 May, which I assess at £25,449.40. In addition, Mr Nelson is entitled to claim the reference fee of £275 which he paid in December 2023, and I therefore determine that SEPD shall pay Mr Nelson’s costs at £25,724.50, plus VAT on Mr Davies’s fees if Mr Nelson is not able to reclaim that.

These are claimable after 19 May 2025 to the extent they were reasonably incurred and reasonable in amount. CMS for SEPD have provided a helpful costs breakdown from 19 May. There are three elements to this: CMS’s costs, Mr Church’s firm’s costs, and counsel’s fees.

First, CMS’s fees. From and including 20 May 2025 these total £29,474.30, of which £21,752.20 were incurred up to the publication of the compensation decision; the remainder were in respect of submissions on costs.

CMS’s fees cover activity by four fee earners, ranging from a partner charging £365 per hour to a trainee at £110 per hour, plus an outdoor clerk at £220 per hour. In my judgment this relatively simple, albeit time-consuming matter, did not warrant that level of resource. For instance, it was not necessary for SEPD to be represented at the hearing by both a partner and a Grade A solicitor. On the basis of the information provided, and without carrying out a detailed assessment, I reduce the amount claimable from £21,752.20 to £15,000.

The remaining £7,722.10 is in respect of costs submissions. The respondent is being awarded less than half of the amount claimed in costs. It is therefore appropriate to reduce the amount claimable on the costs submissions themselves. I allow £3,000.

Accordingly, I allow £18,000 in respect of CMS’s fees.

Secondly, as regards their expert’s fees, a helpful timesheet has been submitted which outlines the fees of Mr Church, a senior director, at £250 per hour, and his colleague Mr William Gullett, a senior surveyor, at £185 per hour. Of the total of £15,502.50 outlined, SEPD claims £12,500. The fees incurred after 19 May 2025 total £10,540, comprising fees of both Mr Church and Mr Gullett. Some of Mr Gullett’s fees in assisting Mr Church are reasonable, for instance ‘PP1-PP2 research and note to HC’; it would have been more cost effective for a senior surveyor to carry out this work than a senior director.

However, I disallow two sets of fees incurred in Mr Gullett’s work. Given Mr Church’s experience, he could have more attended the site visit alone, and given that the respondent was represented at the hearing by counsel, with solicitors present, it is not reasonable to claim £1,387.50 for Mr Gullett sitting in the back of the court. Of the £10,540, I disallow £1,202.50 for Mr Gullett attending the site visit, and £1,387.50 for his presence at the hearing. Accordingly, I allow £7,950 for SEPD’s experts from 19 May 2025.

Finally, counsel’s fees for the hearing were £22,000 (in addition to £9,875 for advice/conference). Ms Chorfi, called in 2008, is a senior junior in a leading set of specialist property chambers. This was a modest claim which could reasonably have been defended by less experienced counsel, and I allow £15,000 for counsel’s fees.

I therefore direct that Mr Nelson shall pay £40,950 of SEPD’s costs.

In summary, therefore, I direct that SEPD shall pay Mr Nelson’s costs of £25,724.50 plus VAT on Mr Davies’s fees if appropriate and if Mr Nelson is not VAT-registered and unable to reclaim them.

Mr Nelson shall pay SEPD’s costs of £40,950 of SEPD’s costs.

The net effect shall depend on whether Mr Nelson can reclaim VAT on Mr Davies’s fees, if charged. In accordance with s.4(5) of the 1961 Act, the appropriate net amount may be deducted from the compensation payable.

In addition, Mr Nelson shall be responsible for the Tribunal’s hearing fee of £624.00, since this was incurred after 19 May 2025.