MR & MRS J E PIERCE v THE COAL LCA/2/1998

UPPER TRIBUNAL
LANDS CHAMBER
LCA/2/1998Case No LCA/2/1998
Between
MR & MRS J E PIERCEApplicantTHE COALRespondent
Before
The PresidentJames Laughland (instructed by Nicholas Drukker & Co) for ClaimantMartin Farber (instructed by DLA, solicitors of Sheffield) for Compensating AuthorityVenue 48/49 Chancery Lane, London WC2A 1JRDate 21 February 2002Hearing 19 February 2002Property: Aerodrome & Agricultural Land - 63.15 acres, Field Nos: 5615, 6811, 8009, 0008, 8816, 8818, 8721, 8924, 7925, 0025, 9342, 8155, 7549, 7937, 0042, at Ley Farm, Chirk, Wrexham LL14 5BGCatchwords: COSTS – claim for compensation under Opencast Coal Act 1958 – costs of the reference awarded to claimant – held such costs could include costs incurred for purposes of the reference before notice of reference given
[1]This an appeal against a decision of the Registrar dated 11 December 2001 on an application by the compensating authority to have determined as a preliminary issue a question of principle on the claimants’ bill of costs dated 18 May 2001. On 14 June 2000 the Member Mr N J Rose FRICS determined that the authority must pay the claimants’ costs of the reference incurred up to the date (17 May 1999) of a sealed offer made by the Authority. The costs if not agreed were to be the subject of a detailed assessment by the Registrar. They were not agreed. The question raised for the Registrar’s determination was whether under the terms of the order the claimants were entitled to any costs incurred before the date (22 December 1997) on which notice of reference was given. The Registrar determined that they were not entitled to any such costs and disallowed them. The claimants now appeal.[2]The reference to this Tribunal was for the determination of the compensation payable to the claimants under the Opencast Coal Act 1958 in respect of the exercise by the Authority of compulsory rights to work coal by opencast methods on land owned by the claimants at Ley Farm, Chirk, Wrexham. The compulsory rights order had been confirmed on 8 July 1986. The compensating authority entered on the land on 26 September 1986 and returned it (less a part that had been compulsorily acquired by the Welsh Office for the Chirk by-pass) on 26 March 1994.[3]The Member was due to decide the disputed compensation claim at a hearing starting on 22 May 2000. Two days before then, on 20 May 2000, the claimants accepted the compensation offered in the sealed offer. The issue of costs had not, however, been agreed and the Member, having heard leading counsel on both sides on the issue on 23 May, determined that the Authority must pay the claimant’s costs of the reference incurred up to the date of the sealed offer; that the claimants must pay the Authority’s costs incurred up to and including the first day of the hearing; and that the Authority must pay two-thirds of the claimants’ costs of and incidental to the costs hearing on 23 May 2000.[4]The sealed offer, in the letter of 17 May 1999 was in the following terms:
“Our Clients offer the sum of £360,000 in settlement of all claims which are the subject of the Reference to the Lands Tribunal (LCA/2/1998) between our Clients and John Elvet Pierce and Patricia Mary Pierce. In addition provided that the above offer is accepted within 14 days of the date hereof our Clients will agree to pay the costs reasonably incurred by your Clients for the purposes of, or for purposes connected with, the preparation and prosecution of their claim pursuant to the Opencast Coal Act 1958, such costs to be assessed by the Registrar of the Lands Tribunal on the High Court standard scale in the absence of agreement.”
[5]The letter accepting the offer was dated 21 May 2000. It referred to the sealed offer, and said: 2 “We write to confirm our Clients’ acceptance of your Client’s offer set out in the first paragraph of that letter.”[6]The potential importance of the question that the Registrar had to decide can be gauged from the fact that the claimants’ solicitors’ bill for the period 12 March 1985 to 3 December 1997 (19 days before the reference was made) totals £315,952.62 plus VAT and represents 69% of the claimants’ bill up to 17 May 1999 plus the costs of the hearing on 23 May 2000.[7]Two sets of statutory provisions are relevant to the question. Firstly, the Lands Tribunal Act 1949 section 3(5) provides that the Tribunal “may order that the costs of any proceedings before it incurred by any party shall be paid by any other party;” and rule 52(1) of the Lands Tribunal Rules 1996 provides that “the costs of and incidental to any proceedings shall be in the discretion of the Tribunal.” Secondly there are specific provisions in the 1958 Act and regulations made under it relating to professional and other fees incurred by the claimants in preparing and supporting claims for compensation under the Act. Section 40, as amended, and so far as material, provides: “(1) Compensation under this Act shall not be payable by any person unless a claim for it is duly made to that person. (2) Regulations made under this section by the Minister may –(a) require claims for compensation under this Act to be made in such form, and within such time, as may be prescribed by the regulations;(b) require a claimant to provide such evidence in support of the claim, and such information as to the interest of the claimant in land to which the claim relates, and as to the interests of other persons therein which are known to the claimant, as may be so prescribed;(c) include provisions as to professional and other fees incurred by claimants in preparing and supporting claims for compensation under this Act, requiring any person, within such limits (whether as to descriptions of fees, or as to amount, or otherwise) and subject to such conditions as may be prescribed, to pay fees so incurred: Provided that no such regulations, in so far as they are made under paragraph (c) of this subsection, shall apply to the costs of proceedings before a court or tribunal, or shall affect any power of a court or tribunal with respect to any such costs. (3) Any dispute – (a) as to a right to compensation from any person under this Act, or as to the amount of such compensation, or (b) as to a right to the payment of fees by virtue of regulations made under this section, or under section thirty-six of this Act, or as to the amount of the fees payable in any case by virtue of such regulations … shall be determined by the Lands Tribunal.” 3[8]Under these provisions regulations have been made dealing with claims (the Opencast Coal (Claims) Regulations 1959) and with fees (the Opencast Coal (Fees) Regulations 1960). Regulation 4 of the 1960 Regulations, as amended, provides that the Coal Authority – “… shall pay, subject to the provisions of the Schedule hereto, any professional fees reasonably incurred by a claimant for compensation in preparing and supporting his claim.” The Schedule sets out the maximum amounts payable by the Authority in accordance with regulation 4. The claimants do not appear at any stage to have sought the payment of fees under this provision.[9]The Registrar was referred to in Re Gibson’s Settlement Trusts [1981] 1 Ch 179. In that case Sir Robert Megarry V-C, basing himself on Pệcheries Ostendaises (Soc Anon) v Merchants Marine Insurance Co [1928] 1 KB 750 and Frankenburg v Famous Lasky Film Services Ltd [1931] 1 Ch 428, held that, on an order for taxation of costs, costs that otherwise would be recoverable are not to be disallowed by reason only that they were incurred before action brought. Accepting the contention of the Authority, the Registrar held that the general principle of Re Gibson had been displaced by the specific statutory regime set out in the 1958 Act and the Regulations. He had also been referred to London County Council v Tobin [1959] 1 All ER 649, in which the Court of Appeal held that legal and accountancy fees reasonably and properly incurred by a claimant in preparing his claim for compensation for the compulsory acquisition of his land should be included in the compensation awarded. The Registrar held in the light of this that, where statute required it (and he implied that here the 1958 Act and the Regulations did require it) a claim for pre-reference costs ought to be included as an element of the claim for compensation and not as part of the costs of the reference.[10]Four grounds of appeal against the Registrar’s decision had been advanced by the claimants. In the event Mr James Laughland pursued only one of them. He said that the Registrar erred in holding that the 1958 Act and the Regulations displaced the general principle that the costs of proceedings may include costs incurred before the proceedings were started. He said that the proviso in section 40(2) makes it clear that the Regulations did not affect the power of the Tribunal to award costs, and, applying Re Gibson, the power included pre-reference costs. Section 40(2) and the Regulations only applied where no reference was made. Where reference was made, the fees that would otherwise be payable under those provisions would constitute costs of the reference.[11]For the Authority Mr Farber submitted that, under the 1958 Act and Regulations, pre- reference costs (professional fees reasonably incurred in preparing a claim) must be paid by the compensating authority but that these costs formed part of the compensation that must be paid under the 1958 Act. As items of compensation, they should have been claimed as such and could not be “costs of the reference”. The effect of the proviso, Mr Farber said, was that the Regulations would operate, where a claim was pursued before the Tribunal, so as to exclude from the ambit of the reference costs all fees incurred before the notice of reference. 4[12]I can express the conclusions I have reached in a series of propositions. Firstly, an order that a party pay the costs of the reference does not mean that only costs incurred after the notice of reference are recoverable. Just as the costs of proceedings in a civil action may include costs incurred for the purposes of the action but before the action was begun, so the costs of a reference may include costs incurred for the purposes of the reference but before the notice of reference.[13]Secondly, the language of section 40(2)(c) – “professional and other fees incurred by claimants in preparing and supporting claims for compensation under this Act” – is apt to cover all such fees incurred at any stage in pursuit of a claim. Thirdly, and conversely, not all such fees will necessarily be costs of the reference. As Morris LJ said in Tobin [1959] 1 All ER 649 at 653C-D:
“It is said that the costs incurred in preparing a claim could be regarded as costs of and incidental to any proceedings. But when a claim is presented following on the request contained in a notice to treat, it may be the hope of both parties that there never will be ‘proceedings’ before the Lands Tribunal. The reason why the acquiring authority ask for a claim to be presented is that so if possible they can amicably agree as to the amount of compensation and so settle all outstanding matters.”
The same applies, in my view, in the case of a claim for compensation under the 1958 Act.[14]Fourthly, the proviso in section 40(2) is explicit: the Regulations do not affect the power of the Tribunal to award costs in any proceedings before it. The Tribunal may thus award a claimant his costs of the reference notwithstanding that those costs may include – and almost certainly will include – professional and other fees “incurred in preparing and supporting” the claim. Such fees as constitute costs of the reference will be recoverable under the award of costs and will not be recoverable under the Regulations. The proviso prevents particular fees being recoverable both under the Act and under an award of costs: and it does this by excluding from the operation of the Regulations any fees that constitute the costs of any proceedings.[15]Fifthly, and contrary to Mr Farber’s contention, professional and other fees incurred in preparing and supporting a claim under the 1958 Act do not, in my judgment, form part of the compensation. That such fees may be claimed as part of the compensation on a compulsory acquisition of land is nothing to the point. In such circumstances they form part of what is payable for disturbance, the right to which is preserved under rule (6) of section 5 of the Land Compensation Act 1961, and thus they form part of the compensation: see Horn v Sunderland Corpn [1941] 2 KB 26 at 33 and 34. This is the basis on which so-called “Tobin costs” are payable. Under section 40 of the 1958 Act, by contrast, a clear distinction is drawn between compensation on the one hand and the right to the payment of fees on the other. Thus under subsection (2) the Minister may make regulations that require “claims for compensation under this Act” to be made in a prescribed form (para (a)) and as to fees incurred “in preparing and supporting claims for compensation under this Act” (para (c)). Subsection (3) treats as separate the right to compensation and the right to the payment of fees when conferring on the Lands Tribunal jurisdiction in the event of a dispute. Separate regulations were made covering respectively compensation and the right to the payment of 5 fees. The 1959 Claims Regulations did not confer any right to the payment of fees, and its provisions as to the form in which and the time within which claims are to be made do not apply to fees either expressly (no mention is made of them in the Schedules) or by implication (since at the time the Regulations were made there was no right to the payment of fees).[16]The effect of these conclusions is that the appeal against the Registrar’s determination must be allowed. Costs incurred by the claimants are not prevented from being costs of the reference by virtue of having been incurred before notice of reference was given. It is not the case, as contended by the Authority, that costs incurred before the notice of reference can only be claimed as payments under section 40 or that they must be claimed as part of the compensation. Nor is it the case, as contended by the claimants, that the Act and Regulations confer an entitlement to payment for fees only where no reference has been made or that, once a notice of reference has been given, everything to which the claimant would have been entitled under those provisions becomes recoverable as costs of the reference. It will be for the parties to agree, or for the Registrar to determine if they cannot do so, what costs, of those that were incurred before the notice of reference, were incurred for the purposes of the reference (rather than for preparing and negotiating the claim before the dispute arose) and are thus recoverable under the order for costs.[17]Mr Laughland asked for the claimants’ costs of the determination of the issue in the event that I should allow the appeal. Mr Farber reserved the Authority’s position. The Authority will have 14 days from the date of this decision in which to make representations, if they wish to do so, on the claimants’ application for costs, and the claimants will have 7 days thereafter in which to reply. Dated 21 February 2002 George Bartlett QC, President 6