Harnek Singh Samra & Anor v Sandwell Metropolitan Borough Council

The claimants applied for an order that the acquiring authority pay their costs of the proceedings, secondly that those costs are assessed on the indemnity basis if not agreed and, finally they seek a payment on account if the costs are to be determined by the Tribunal.

The claimants says that they made an offer to settle on 21 October 2025 for compensation of £425,000 and costs of £100,000 plus VAT. The acquiring authority made a counter offer on 31 October 2025 with a settlement of £250,000 and £21,242 in post reference costs. Subsequent negotiations did not result in a settlement.

The acquiring authority acknowledges that the claimants won, ‘but not overwhelmingly’ and accepts responsibility to pay the claimants’ costs, both before and after the date of their counter offer, but only on the standard basis. The acquiring authority acknowledges that the principle of equivalence applies in circumstances where the compulsory purchase order (‘CPO’) is forced upon the claimant and they should not be worse off as a result. In this case it takes the view that it was the claimants’ neglect that led to the CPO. However, notwithstanding that the acquiring authority considers the claimants’ conduct to be regrettable, given the passage of time, evidential position and the Tribunal’s Practice Direction, it does not seek to departure from the ‘normal rules’.

The claimants’ case for indemnity costs is that firstly this case concerns the compulsory purchase of land and secondly that the acquiring authority acted unreasonably. The claimants note that the Tribunal’s Practice Direction 25.12 says that in general terms costs are assessed only exceptionally on the indemnity basis, however that wording is notably absent from the part of the Practice Direction that deals with costs in references concerning compulsory purchase.

The claimants say that in cases where property has been forcibly expropriated by the State and litigation has been required to secure adequate compensation, the indemnity basis is appropriate. They rely on National Roads Authority v Bodden (2013) [2016] RVR 176, a case heard in the Court of Appeal of the Cayman Islands and by a panel of judges that included Sir John Chadwick (the erstwhile Chadwick LJ). The decision held that a claimant’s costs should be assessed on the basis that all items should be allowed unless there was a special reason to the contrary. That reason could only be an item that was unreasonable in amount or unreasonably incurred. The claimants say that this is the indemnity basis ‘in all but name’ and that the key principle underlying the decision was the principle of equivalence. In other words, the claimant should be put as closely as possible to the same position as if his land had not been acquired. The principle was extended to the costs of bringing litigation which resulted directly from the acquisition.

The claimants note that the Tribunal applied the principle in the decision in Bodden to the subsequent cases of Bonnell v Carmarthenshire County Council [2014] UKUT 413 (LC) and Pro Investments v. Hounslow L.B.C. [2022] UKUT 54 (LC). However, in the latter case it was not in dispute that the indemnity basis was appropriate.

The acquiring authority disputes the claimants’ analysis. It says that if the Tribunal had intended to adopt the position proffered by the claimants, then it would have been included in the most recent iteration of the Tribunal’s Practice Directions which took effect in 2024. The acquiring authority refutes the decisions in Bodden, Bonnell and Pro Investments as being relevant to the circumstances of this case and says that the proper approach is set out in Nofax Station Road Limited v The London Borough of Barnet [2025] UKUT 325 (LC). It submits that in Pro Investments the question of whether indemnity costs were appropriate did not arise because the parties agreed that it was, and consequently it is not part of the ratio of the case. The acquiring authority’s position is that it would be surprising if indemnity costs were appropriate in a case where the acquiring authority made a CPO on public interest grounds because the claimants failed to maintain their land, to the detriment of the neighbourhood.

The second limb of the claimants’ argument for indemnity costs is that the acquiring authority maintained an unreasonably obstructive approach to the claim which impeded the possibility of settlement and increased costs. In particular, in rejecting the claimants’ offer to settle, the acquiring authority characterised the valuation agreed between the appointed surveyors as a ‘blue sky’ figure unhelpful to the Tribunal and rejected the evidence of the claimants’ building surveyor, Mr Hannibal-Law in favour of its own engineer, Mr Hussein, who did not give expert evidence. The claimants also say that the acquiring authority took an unrealistic initial stance, its valuation being nil, was slow to provide proper disclosure, and was unnecessarily obstructive and hostile. The acquiring authority appeared to not properly comprehend the roles of Mr Hannibal-Law and Mr Hussein and as a result the opportunity to work collaboratively was squandered.

The acquiring authority denies that it acted unreasonably although it has provided nothing in response to the comments made by the claimants. The acquiring authority submits that it is very rare that the refusal of an offer to settle will result in indemnity costs. For authority they rely on the Court of Appeal decision in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson (a firm) [2002] EWCA Civ 879; [2002] CP Rep 67 at [30]-[31].

The acquiring authority has properly conceded that the claimant should be awarded its costs. The only issue for the Tribunal is whether costs should be on a standard or indemnity basis.

I note that the decision in Bonnell related to costs in an appeal against a certificate of appropriate alternative development, and although indemnity costs were awarded, it shares little in terms of facts with the present case. In Nofax, a case involving the compulsory acquisition of land, costs were assessed on the standard basis after submissions about the conduct of the acquiring authority, rather than the principle of equivalence.

The acquiring authority refers to the Court of Appeal’s decision in Purfleet Farms Ltd v Secretary of State for Transport, Local Government and the Regions [2002] EWCA Civ 1430, a decision which examined whether the principle of equivalence refers just to compensation awarded or whether the costs incurred by the claimant should be covered as well. In the event costs on the indemnity basis were not awarded and the acquiring authority’s conclusion from the decision is that there is no norm that a claimant who is the subject of a CPO should receive a full award of costs unless there are special reasons not to do so.

There is some force in the argument that if the Tribunal was satisfied that the principle of equivalence meant that claimants should receive all of their costs then that approach would be clearly set out in the latest iteration of the Practice Directions, which postdate the above authorities. The context for the exercise of the Tribunal’s judgement was most recently set out by Lindblom LJ in Mann & Ors v Transport for London [2018] EWCA Civ 1520, an appeal concerning the award of costs on the standard basis in relation to a series of claims under Part 1 of the Land Compensation Act 1973. At [29] he commented on the approach adopted by the Tribunal:

“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 decision in Bodden is obviously not binding on the Tribunal but could be said to be persuasive and it is notable that Sir John Chadwick sat on the Purfleet case as well. It has been applied by the Tribunal in Bonnell but not in Nofax. In Pro Investments the Tribunal (Martin Rodger QC, Deputy Chamber President and P D McCrea FRICS FCIArb) commented at [3]:

“That is because an indemnity against the reasonable costs of pursuing a claim for compensation is consistent with the principle of equivalence, as the Tribunal (Mr N J Rose FRICS) held in Bonnell v Carmarthenshire County Council [2014] UKUT 413 (LC), applying the reasoning of the Court of Appeal of the Cayman Islands in National Roads Authority v Bodden [2016] RVR 176.”

It seems to me that the answer to the question of whether the principle of equivalence extends to costs is answered by paragraph [47] of Bodden which states that:

“We would prefer to say, therefore, that the claimant’s costs should be assessed on the basis that all items should be allowed in the absence of some special reason to the contrary. Such a special reason would exist in respect of any item which was unreasonable in amount or unreasonably incurred, the burden of showing that being on the NRA [the acquiring authority].”

That reasoning was entirely aligned with Lord Justice Chadwick’s earlier decision in Purfleet where at [42] he stated:

“42.

But, where there has been no offer or where the amount of the award exceeds the amount of the offer, then (again, prima facie ) “the expenses of determining the amount of disputed compensation may be seen to be part of the reasonable and necessary expense which is attributable to the taking of the lands compulsorily by the acquiring authority”, as the Lord President observed in Emslie & Simpson Limited v Aberdeen District Council [1995] RVR 159 , at page 164. In such a case the refusal to allow the claimant some part of his costs of the reference must be justified by a finding that the costs to be disallowed have not been incurred as part of the reasonable and necessary expense of pursuing the reference. As Lord Justice Potter has put it, the Tribunal must be able to identify circumstances “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”. Costs attributable to conduct of that nature can form no part of “the losses fairly attributed to the taking of his land” in respect of which the claimant is entitled to compensation.”

The acquiring authority has not provided any reason, special or otherwise, that would lead me to the conclusion that I should disapply the Court of Appeal’s rationale. They did not identify any conduct by the claimant that caused an “obvious and substantial escalation”. This reference can be distinguished from Mann on the basis that Mann involved no loss of land and the principle of equivalence was not applicable. In my judgement the principle of equivalence should apply in this case, and the claimant should have his costs on the indemnity basis.

Having concluded that as a matter of principle the claimant is entitled to all of his costs of the reference, excluding only those which the acquiring can persuade the costs judge were unreasonably incurred, it is not necessary for me to engage with the second limb of the claimant’s argument that the acquiring authority’s litigation behaviour warranted an award on the indemnity basis.

It is agreed that the costs, which are said to amount to £293,284 (inclusive of VAT), should be the subject of a detailed assessment. That assessment will take place in the Senior Courts Costs Office. I have received submissions from the parties regarding the quantum of a payment on account. The claimants seek a sum in the range of £100,000 to £150,000 while the acquiring authority submits that £30,000 would be appropriate. I determine that while the detailed assessment is finalised the acquiring authority will pay the claimant the sum of £150,000 on account. such payment to be made within 28 days of the date of the order that accompanies this decision.