Nofax Station Road Limited v The London Borough of Barnet

This is a decision on costs arising out of the Tribunal’s determination of compensation in Nofax Station Road Limited v London Borough of Barnet [2025] UKUT 241 (LC) dated 28 July 2025 (‘the compensation decision’) in respect of the claim by Nofax Station Road Limited (‘the claimant’) against the London Borough of Barnet (‘the acquiring authority’) following the compulsory purchase of the claimant’s land at 1-11 Station Road, West Hendon, Barnet.

The parties have made written submissions on costs. As in the compensation hearing, the claimant was represented by Mr Guy Williams KC, the acquiring authority by Ms Rebecca Clutten, and I am again grateful to them both.

The principles are not in dispute. In being awarded compensation of £1,510,000, the claimant was the successful party in the litigation. The parties agree that s.4 of the Land Compensation Act 1961 ('the 1961 Act’) is engaged (but see below). They agree that the usual position is that the claimant would receive its costs.

The authority made an unconditional offer to settle on 10 September 2024 at £325,000.

The claimant made an unconditional offer to settle on 15 October 2024 at £975,000.

The claimant applies for its full costs from the reference date of 27 September 2023. If the amount of those costs cannot be agreed, they should be assessed on an indemnity basis.

The acquiring authority says that there are special reasons to depart from the usual order. It says that it should pay the claimant’s costs of the reference save in respect of costs associated with the planning evidence, on which it submits that each party should pay their own costs. If not agreed, the claimant’s costs should be assessed on the standard basis and that compensation should be paid within 28 days of this decision, unless any application is made for permission to appeal to the Court of Appeal. If such an application is made within 28 days of the final determination the award of compensation to be part of that appeal.

The relevant statutory provisions are not in dispute.

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

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.

Section 4 of the 1961 Act provides:

“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; or

(b)

the Upper Tribunal is satisfied that a claimant has failed to deliver to the acquiring authority, in time to enable them to make a proper offer, a notice in writing of the amount claimed by him, containing the particulars mentioned in subsection (2) of this section;

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.

(2)

The notice mentioned in subsection (1) of this section must state the exact nature of the interest in respect of which compensation is claimed, and give details of the compensation claimed, distinguishing the amounts under separate heads and showing how the amount claimed under each head is calculated.

(3)

Where a claimant has delivered a notice as required by paragraph (b) of subsection (1) of this section and has made an unconditional offer in writing to accept any sum as compensation, then, if the sum awarded to him by the Upper Tribunal is equal to or exceeds that sum, the Upper Tribunal shall, unless for special reasons it thinks proper not to do so, order the acquiring authority to bear their own costs and pay the costs of the claimant so far as they were incurred after his offer was made.

(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.”

Section 4 of the 1961 Act is normally relied upon where the Tribunal’s determination of compensation does not exceed an unconditional offer made by an acquiring authority, and the usual order in those circumstances is that the authority would be awarded its costs ‘from the date the offer was made’. (Footnote: ¹)

That did not happen in this reference (the authority’s offer of £325,000 being significantly below my determination of compensation of £1,510,000). S.4(1)(a) is not engaged in reverse simply because the authority’s offer did not beat the Tribunal’s award. In those circumstances that offer is irrelevant.

Instead, we need to look at s.4(3), and the claimant’s offer to settle at £975,000, which the Tribunal’s award exceeded. S.4(3) indicates in those circumstances the Tribunal shall, unless there are special reasons not to do so, order the authority to bear their own costs and “pay the costs of the claimant so far as they were incurred after his offer was made.”

But what about the costs of a successful claimant up to the point it made the offer that the Tribunal’s award exceeded? It seems to me that for the period after the date of the claimant’s offer, I am bound by s.4 - the Tribunal ‘shall unless for special reasons it thinks proper not to do so, order the acquiring authority to bear their own costs and pay the costs of the claimant so far as they were incurred after his offer was made” – so the default position is that the claimant shall be awarded his costs ‘unless…’.

For the period before that offer, the Tribunal still has the power to award costs, but this is a discretionary power under s.29(1) of the 2007 Act, free of the s.4 constraints.

The Tribunal’s Rule 10(12)(c) is amplified by the Upper Tribunal (Lands Chamber) Practice Directions (January 2024):

“How the power to award costs is exercised

25.10

The Tribunal’s power to award costs is discretionary, and it will usually be exercised in accordance with the principles applied in the High Court. The general rule is that the successful party ought to receive their costs from the unsuccessful party… The Tribunal will have regard to all the circumstances of the case, 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 which may be considered will include conduct during and before the proceedings; whether a party has acted reasonably in pursuing or contesting an issue; the manner in which they have conducted their case; whether or not they have exaggerated their claim; and whether they have unreasonably refused to engage in ADR or comply with a relevant pre-reference protocol.

25.11

The Tribunal will normally award costs on the standard 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 incurred or reasonable and proportionate will be resolved in favour of the paying party.

25.12

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 incurred or are reasonable in amount will be resolved in favour of the receiving party.”

There are three issues for me to decide. First, whether the claimant should be awarded the costs of its planning expert, Mr Dear. Secondly, whether the claimant’s costs should be assessed on the indemnity basis if the quantum of those costs cannot be agreed. Thirdly, whether the payment of compensation should be deferred.

For the authority, Ms Clutten did not dispute that the claimant has succeeded in his claim overall. She submitted, and I accept, that it was the valuation consequences of two alternative approaches that led to the vast difference in valuations, and the valuation experts agreed much in the alternative. They are free of criticism.

The claimant’s planning case, however, failed. That would not ordinarily justify a divided award but here, she submitted, the claimant’s planning witness Mr Dear failed to comply with his obligations to the Tribunal, and advanced a case that was fundamentally unsustainable.

Ms Clutten also referred to the conclusions I came to on Mr Dear’s evidence (paragraphs [45-48] of the compensation decision), and his conduct in the witness box ([48]).

She submitted that all of the above gives rise to a special reason why the usual rule should be departed from. The authority’s position is that the above reasons would justify an order of costs in its favour on the planning issues, but having regard to the overall result, an appropriate order is that each party is to bear its own costs in relation to planning evidence.

Mr Williams KC, for the claimant, disagreed, submitting that Mr Dear’s evidence was not wholly rejected, in that the claimant’s position on commercial space [59] succeeded, and that I did not accept the authority’s position on housing mix (although I note that was as a result of Mr Alston’s fair acceptance noted at [54]). The scheme which I eventually adopted, known to the parties as ‘3A’ was first suggested by Mr Dear in his second report.

Mr Williams KC referred to the Court of Appeal’s decision in Purfleet Farms Limited v Secretary of State for Transport, Local Government and the Regions [2002] ECWA Civ 1430, where Potter LJ (at [29]) said this:

“…the proper approach of the Tribunal for the costs of a successful claimant (i.e. a claimant who is awarded more than the amount of an unconditional offer by the respondent) should be that he is entitled to his costs incurred in the proceedings in the absence of some ‘special reason' to the contrary. Whether such special reason exists in any given case is a matter for the judgment of the Lands Tribunal. Plainly it may exist where wasted or unnecessary costs have been incurred for procedural reasons as a result of the conduct of the claimant (e.g. abandoned issues, unnecessary adjournments, or failure to comply with directions of the Tribunal). However, so far as the nature and substance of the case advanced by the claimant is concerned, special reasons should only be regarded as established where the Tribunal considers that an item of costs incurred or an issue raised was such that it could not on any sensible basis be regarded as part of the reasonable and necessary expenses of determining the amount of the disputed compensation. This would apply not only to a claim advanced without any statutory basis but to other examples of manifestly unreasonable conduct which may give rise to unnecessary expense in the course of the proceedings. It means, in my view, that, following the hearing of a compensation reference in the Lands Tribunal in which the claimant has been successful, a special reason for departing from the usual order for costs should only be found to exist in circumstances where the Tribunal can readily identify a situation in which the claimant's conduct of, or in relation to, the proceedings has led to an obvious and substantial escalation in the costs over and above those costs which it was reasonable for the claimant to incur in vindication of his right to compensation”.

In the present case, planning evidence was necessary to establish the assumed planning permission on which compensation would be paid. While Mr Dear’s scheme was rejected, there were also issues with the authority’s scheme such as the rear building line, the inclusion of commercial space, and the mix of units.

Both sides cited examples where they say the other’s expert failed to comply with the Tribunal’s practice directions, orders, or their obligations as experts, and submitted copies of fairly depressing correspondence to that effect. I am not persuaded they lead me anywhere having regard to the overall picture.

Whilst Mr Dear might not rush to the witness box in the future, I do not see anything in his conduct which led to an overall increase in costs, and I am mindful of the wider picture of the level of compensation awarded to the claimant in the light of the case advanced by the authority. While I placed little weight on his evidence, it did not generate wasted or unnecessary costs to any material degree.

On this issue, I make no differentiation between the exercise of my discretion for the period up to the date of the claimant’s offer, and the obligations imposed on me under s.4 for the period after the offer, under which there is no special reason for me to depart from the usual rule. The claimant shall have its costs, including its costs in respect of the planning evidence.

Mr Williams KC submitted that the authority’s conduct has been sufficiently inappropriate that the claimant’s costs should be assessed on the indemnity basis.

The authority a) issued a reference to the Tribunal despite the parties being in negotiations; in doing so b) ignored the Land Compensation Claims Protocol, viz “a reference should not be made when the resolution of outstanding issues is still actively being explored”; c) the reference was not accompanied by any plans, drawings or valuation evidence showing potential AAD, and none were forthcoming despite valuations being produced in late 2023; d) the claimant’s AAD was sent to the authority in January 2024 in accordance with the agreed timetable, yet the authority’s AAD was not sent to the claimant until the exchange of expert reports (and then it increased the number of units).

But most significantly, the claimant says, the authority changed the legal basis of its entire case when it submitted Mr Trustram-Eve’s report in June 2024, without notifying the claimant in advance, reducing its suggested compensation from £161,250 to £10,750. This significantly contradicting the authority’s pleaded case to that point, which was advanced on the same basis as the claimant’s pleadings and evidence and which was the basis I eventually adopted in the compensation decision. Had the authority maintained its position on the correct approach to valuation then all the valuation permutations on that basis would have been agreed, leaving a small number of issues in dispute, and all leading to a substantial compensation award rather than the £15,000 then pleaded.

Mr Williams KC submitted that these behaviours are clearly out of the norm. The authority rushed into issuing the reference with no notice, no adherence to the Protocol or, seemingly, legal advice. It produced inadequate details to support its case, did not produce plans or drawings, and it failed to share evidence in a timely manner. It then, once it had instructed solicitors and counsel, proceeded to change the basis of its case at a very late stage and with no notice, and with no formal application to the Tribunal.

In response, Ms Clutten submitted that an acquiring authority is as entitled as a claimant to submit a reference at a time of its choosing within the six-year limitation period. Colliers (the claimant’s third set of advisors) submitted a claim for compensation in October 2021, but no substantive discussions were held with them. An offer to settle was made to Colliers in June 2023, but the authority was informed in August that the firm was no longer acting. Discussions with the claimant’s solicitors then ensued regarding the management of the case, including the potential for either side making a reference to the Tribunal. No planning or valuation issues were discussed, and in the end the authority decided to make the reference. The failure to comply with the Protocol was a regrettable oversight, but given the failure of the claimant’s experts to engage until a very late stage, compliance with the Protocol would not have narrowed the issues or led to resolution of all or part of the case.

As for the reference not including plans etc, Ms Clutten submitted that the reference complied with the Tribunal’s Practice Direction 6.2, in that it did ‘identify the relevant facts, the issues to be determined by the Tribunal, and the outcome which the party is asking for. Each statement of case must set out the key facts on which the party relies.” The claimant was able to plead its reply, and did not seek further and better particulars. Ms Clutten noted that PD 6.5 confirms that “Documents must not be annexed to a statement of case unless they are necessary to identify the issues.”

In regard to the authority changing its case, Ms Clutten pointed out that the departure from its pleaded case was sanctioned by an order of the Tribunal, and that the authority agreed to pay the claimant’s consequential costs at that time. The costs consequences of the change in procedural terms have therefore already been addressed. Had the change, and its timing, been procedurally unfair or inappropriate in principle, permission could have been refused. She referred to correspondence between the parties in which it was indicated that the authority would have liked to have explained its position to the claimant, but the claimant’s expert would not engage.

In short, Ms Clutten submitted, while the authority has not succeeded in its legal arguments on valuation, its position, in the light of s.6A of the 1961 Act being considered for the first time by the Tribunal, was a reasonable one to adopt. The conduct of the claimant’s experts in failing to engage is a further reason not to award costs to the claimant on an indemnity basis.

I can deal with this fairly briefly. Awarding costs on the indemnity basis is, as the Practice Directions referred to above note, exceptional. It is generally reserved for cases where a party’s conduct has been out of the normal range of acceptable litigation behaviour. I am not persuaded there is anything sufficiently exceptional or abnormal in this case, although it should certainly not be taken as a model. The Tribunal encourages compliance with the Protocol, and in an appropriate case it will take a departure from it into account, including by awarding costs on the indemnity basis if appropriate. But either party is at liberty to make a reference at a time of its choosing, and there is reason to think that the claimant and its successive advisers were not fully committed to achieving a prompt negotiated settlement. Leisurely compliance with the Protocol should not be allowed to become an excuse for delay and there is something to be said for grasping the nettle and commencing a reference if the pre-reference process appears to have stalled. As for the authority’s statement of case, the Tribunal encourages these to be as brief as the circumstances allow, and limited to the level of detail required sufficient to enable the other party to understand the case of the party making the reference; it is not the place for detailed plans etc, as the Practice Direction indicates. As for the authority’s change of position, as Ms Clutten submitted this was sanctioned by the Tribunal’s order of 2 August 2024.

Each party accuses the other of lack of engagement, etc, which I refer to above. While not ideal, there is nothing exceptional in this to warrant an award of costs on the indemnity basis. If they cannot be agreed, the claimant’s costs shall be assessed on the standard basis.

Either party has a right to appeal to the Court of Appeal on any point of law arising out of the compensation decision. Since an application for costs has been made, any application for permission to the Court of Appeal must be sent or delivered to the Tribunal within one month of the date of this costs decision (rule 55(2)(b)).

The authority requests that the Tribunal orders that payment of compensation should be made within 28 days of this decision, save where any application is made to the Court of Appeal, in which case compensation should be payable within 28 days of the final determination of any appeal.

The general rule is that an appeal does not operate as a stay on enforcement of an award of compensation (or payment of an award of costs), but that the Tribunal may order a stay if there is a risk of injustice. The authority has tendered a report prepared by Avison Young, its surveyors, designed to persuade me of a risk that, in the event of a successful appeal, it would not be able to recover the compensation paid out to the claimant. In my judgment consideration of an application for a stay is premature, and the appropriate time to consider such an application is when an application is made for permission to appeal. I would warn the authority, however, that I am unlikely to grant any application unsupported by proper evidence or which seeks a blanket stay on any payment. The authority has had the claimant’s land since late 2019, without paying anything approaching a credible compensation sum, and it cannot expect that to continue. One reason why an application for a stay should be considered in tandem with any application for permission to appeal is so that the authority can identify the outcome it seeks on an appeal, and the compensation which, with the benefit of my decision, it now considers it ought to pay.

I decline the authority’s invitation to impose a conditional stay of enforcement at this stage.