Claimants win battle with council over compulsory purchase and indemnity costs

Upper Tribunal member Mark Higgin said the costs due to Harnek Singh Samra and

Karnail Singh Samra must be paid having concluded “as a matter of principle the claimant is entitled to all of his costs of the reference, excluding only those which the acquiring [authority] can persuade the costs judge were unreasonably incurred”.

Sandwell compulsorily purchased land in Smethwick in 2014 for £547,039. The Samras applied for costs on the indemnity basis, but the council said these should be assessed on the standard basis.

The claimants offered to settle for compensation of £425,000 and costs of £100,000 plus VAT.  Sandwell counter offered £250,000 and £21,242 in post reference costs.  Subsequent negotiations did not reach a settlement.

Sandwell argued the claimants won “but not overwhelmingly” and accepted responsibility to pay costs but only on the standard basis as it was the claimants’ neglect that led to compulsory purchase.

The Samras said they were entitled to immunity costs because of the compulsory purchase and because Sandwell acted unreasonably. 

They said the Tribunal's Practice Direction 25.12 said in general terms costs are assessed only exceptionally on the indemnity basis, but that wording was notably absent from the part of the direction that deals with costs concerning compulsory purchase.

Sandwell disputed this interpretation and said if the Tribunal had intended to adopt their position it would have been included in the most recent iteration of the Tribunal's Practice Directions, which took effect in 2024. 

The council’s alleged unreasonably behaviour was what the Samras considered an obstructive approach to their claim which impeded the possibility of settlement and increased costs. 

Mr Higgin said: “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’.”

He added: “In my judgement the principle of equivalence should apply in this case, and the claimant should have his costs on the indemnity basis.”

Mr Higgin noted costs amounted to £293,284 and should be subjected to a detailed assessment by the Senior Courts Costs Office. 

The claimants sought between £100,000 and £150,000 on account and Sandwell counter offered £30,000.  

“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,” Mr Higgin said.

Cain Ormondroyd of Francis Taylor Building Chambers, who appeared for the claimants, said: “The Tribunal had previously awarded compensation of £547,039. In determining costs, it accepted  argument that indemnity costs are the default position in compulsory purchase cases under the principle of equivalence, unless the acquiring authority can show a special reason to depart from that approach. No such reason was identified, and the Tribunal rejected the authority’s submission that costs should be assessed on the standard basis.”

Mark Smulian