OAKLION PROPERTIES LIMITED v DENBIGHSHIRE COUNTY COUCIL ACQ/377/2019
[1]The Tribunal’s substantive decision in this reference was handed down on 12 March 2021. We have now received submissions on costs from Stevensons, Solicitors for the claimant and from Mr Jones, counsel for the respondent.[2]We are now aware that on 13 January 2021, shortly after the Tribunal had conducted a case management hearing and two weeks before the final hearing was due to commence, Stevensons made an offer to settle the reference on behalf of the claimant, which was expressed to be without prejudice save as to costs. The offer was to accept £150,000 to include all elements of the claim and with each side to pay their own costs. The offer was sent by email to Berry Smith, solicitors for the respondent, at 11.47 am on 13 January and was open for acceptance until noon on the following day, 14 January 2021. It was not stated that the offer would be available for acceptance on different terms as to costs after its expiry.[3]We have not been informed of any sealed offer or counter offer having been made by the respondent and its position was that the advance payment of £75,000 which it had made exceeded the claimant’s entitlement and that part of it should be repaid.[4]The claimant submits that as our award of £150,500 exceeded its offer it is the successful party and should be awarded its costs of the reference. It suggests that those costs should be awarded on the standard basis up to 13 January 2021 and on the indemnity basis thereafter, because the offer made on that date was more favourable to the respondent than the eventual outcome. It also seeks a payment of £80,000 on account, representing half of the total sum claimed in costs.[5]The respondent submits that there should be no order as to costs or, alternatively, an order that the claimant should receive only a proportion of its costs. It submits that the total sum claimed was significantly exaggerated, evidenced by the fact that the sum awarded is only 15% of the claim. Moreover, the claimant’s valuer Mr Floyd produced multiple reports during the course of proceedings, leading to an escalation of costs for both parties. The breakdown of costs provided by the claimant shows that invoices from Mr Floyd totalling £77,307 represent almost half of the total incurred by the claimant, but his reports paid only lip service to the comparable methodology preferred by the Tribunal.[6]We agree that the claimant is the successful party and that, in principle, it should be entitled to its costs of the reference. That conclusion does not depend in any way on the claimant having secured more than it was prepared to accept in its offer of 13 January 2021. We have found that it is entitled to compensation of £150,500, which is substantially more than the amount the respondent was prepared to pay. It is therefore the successful party.[7]We do not accept Mr Jones’ submission on behalf of the respondent that the disparity between the claim and the sum awarded justifies treating the respondent as having succeeded or depriving the claimant of all of its costs. There was only one significant issue in this reference, namely the value of the land acquired. Both valuers found the issue difficult because of the lapse of time and the particular characteristics of the building. Costs were not increased by the inclusion of separate claims which failed. Those features appear to us 3 to be more important than the disparity between the sum claimed and the sum awarded. Striking though that disparity is, it is equally striking that the sum awarded by the Tribunal is more than double the sum suggested by the respondent. The respondent could have protected itself against the risk of an adverse award of costs by making a realistic appraisal of the value of the claim and a sensible and admissible offer of settlement. It did neither and, in principle, it must pay the costs of the reference.[8]We have more sympathy with the respondent’s submission that costs were wasted by the manner in which the claimant’s evidence was presented. The hearing bundle eventually included six reports written by Mr Floyd, dated 11 November 2019 (submitted with the notice of reference), 15 October 2020 (his main report), 18 November 2020 (in response to the evidence of Ms Bryan), 15 December 2020 (described as an “amended supplementary report”), 7 January 2021 (a “valuation report”) and 15 January 2021 (a “supplementary expert witness report”). These documents were sprawling and repetitious, with (in most cases) little effort being made to limit each additional report to dealing with new material or answering the evidence filed by the respondent. A case management hearing was necessitated at which we gave permission for the reports of 15 December and 7 January on the basis that they represented Mr Floyd’s up to date views but we expressed concern that the claimant’s valuation evidence was becoming less clear with each iteration and last minute adjustments to the evidence base. For that reason we directed that Mr Floyd provide a summary of his revised valuation, including the calculations supporting it. Mr Floyd took that to be an invitation to prepare a further report running to 13 pages. We agree with the respondent that this approach to valuation evidence was wasteful and unhelpful and resulted in an unnecessary escalation of costs for both parties.[9]In exercising our discretion as to costs we take into account that some of the costs incurred by the claimant in relation to the evidence of Mr Floyd were justified. It was necessary for him to prepare a report to underpin the claimant’s statement of case and a report standing as the claimant’s expert valuation evidence; a report responding to the evidence relied on by the respondent was also permissible. We nevertheless consider that the appropriate response to the disorderly presentation of the claimant’s valuation evidence is to disallow the costs of Mr Floyd’s written evidence prepared after 18 November 2020. That limit will prevent the claimant from recovering costs which could and should have been avoided if proper consideration had been given to the preparation of the claimant’s case on valuation in accordance with the Tribunal’s original directions. But that limit on the claimant’s costs would not take account of the costs incurred on the respondent’s side, or the time devoted by the Tribunal, in assimilating and preparing to deal with the waves of repetitious material spewing from Mr Floyd’s printer. Those costs would have been unnecessary if Mr Floyd had been more continent in preparing his evidence, and there is no reason why such unnecessary costs should fall on the respondent. To avoid that outcome it is necessary either for the claimant to pay a proportion of the respondent’s costs, or for the sum recoverable by the claimant towards its own costs to be further restricted. We are wary of overcomplicating the assessment of costs, and we consider that a rough and ready balance should be struck. In striking that balance we also take into account the fact that Mr Floyd’s valuation was unrealistic and his methodology did not contribute significantly to the Tribunal’s own assessment of the value of the claim. We consider that the appropriate order is one which prevents the claimant from recovering costs in respect of Mr Floyds involvement in the reference after 18 November 2020 (including his preparation for, and attendance at, the 4 hearing). We therefore order that the respondent shall pay the claimant’s costs of the reference but that those costs shall not include any of the costs incurred in respect of work done after 18 November 2020 by Mr Floyd, its valuation expert.[10]In the absence of agreement the costs shall be assessed by the Registrar on the standard basis. We reject the claimant’s request that it receive its costs on the indemnity basis after the date of its offer. We attach no weight to an offer which, despite being commendably realistic, was made so soon before the final hearing and was available for consideration and acceptance for so brief a period (barely 24 hours) that it cannot be treated as a genuine attempt to compromise the reference. Martin Rodger QC Diane Martin MRICS, FAAV Deputy Chamber President Member 28 April 2021