United Kingdom Upper Tribunal (Lands Chamber)

UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2014] UKUT 0372 (LC)

                                                                                          UTLC Case Number: LCA/29/2013

 

                                                                             

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

                                                                             

COSTS – claim for compensation for injurious affection – costs capping – application to join non-party for costs – section 29 of the Tribunals, Courts and Enforcement Act 2007 – rule 10 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, as amended  

                                                                             

BETWEEN:                         

 

 

(1) MR ROBERT DICKINSON                                 

                                               (2) MRS SANDRA DICKINSON

Claimants

and

                            

 

NETWORK RAIL INFRASTRUCTURE LIMITED

 

                                                                                                              Compensating authority

 

 

Re: Willowbank, 2 Barn Road, Handsacre, Rugeley, Staffordshire, WS15 4TA

 

 

Before:

Sir Keith Lindblom, President

 

Sitting at:

the Royal Courts of Justice, Strand, London WC2A 2LL on 17 April  2014 and at 45 Bedford Square, London WC1B 3DN on 13 May 2014 

 

Mr Daniel Saoul, instructed by Squire Saunders (UK) LLP, solicitors for the claimants

Mr Jonathan Klein, instructed by Eversheds LLP, solicitors for the compensating authority

 

© CROWN COPYRIGHT 2014

The following cases are referred to in this decision:

 

Austin v Miller Argent (South Wales) Limited [2014] EWCA Civ 1012

Dymocks Franchise Systems (NSW) Pty. Ltd. v Todd [2004] 1 WLR 2807

PR Records Ltd. v Vinyl 2000 Ltd. [2008] 1 Costs L.R. 19

 

DECISION

 

 

Introduction

 

1.      In this reference the claimants, Mr and Mrs Dickinson, seek compensation from the compensating authority, Network Rail Infrastructure Limited (“Network Rail”), for the injurious affection of their property, Willowbank, 2 Barn Road, Handsacre, Rugeley, Staffordshire (“the property”), under Part 1 of the Land Compensation Act 1973. On 21 August 2013 Mr and Mrs Dickinson applied for an order under rule 10(7) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, as amended (“the 2010 Procedure Rules”), which would protect them against any liability in costs incurred after the date of the order. On 25 October 2013 Network Rail applied for an order joining Mr and Mrs Dickinson’s agents, Thomson Broadbent LLP (“Thomson Broadbent”), as a party to the reference with a view to making an application for costs against them in due course.

 

2.      Those two applications remain live. Three other applications, made by Network Rail on 25 October 2013 under rule 10(10) of the 2010 Procedure Rules, are no longer contentious. By those applications Network Rail sought an order that Mr and Mrs Dickinson pay (1) their costs wasted on the statement of case dated 26 February 2013, which, on 26 July 2013, the Tribunal ordered Mr and Mrs Dickinson to amend, (2) the costs of their application dated 3 April 2013 for an order that an amended statement of case be filed and served, and (3) the costs of their application for directions, dated 29 August 2013. In a letter to the Tribunal dated 20 May 2014 Network Rail’s solicitors invited the Tribunal to order on those three applications that Mr and Mrs Dickinson pay Network Rail the agreed sum of £1,000 in full and final settlement of their costs.  

 

3.      The property is adjacent to the West Coast main line. Under The Network Rail (West Coast Main Line) Order 2003 the line was upgraded by the addition of two further tracks, one on either side of the existing two, so that now there are four. One of those two additional tracks runs some six metres from the rear boundary of the property. Mr and Mrs Dickinson contend that there has been a material increase in noise and vibration from trains using the line and that this has resulted in the value of the property falling by £30,000. The claim has been allocated to the standard procedure. There are, I understand, 37 other similar claims, in all of which Thomson Broadbent have been instructed as agents.

 

4.      At the hearing Mr and Mrs Dickinson were represented by Mr Daniel Saoul, Network Rail by Mr Jonathan Klein. Mr and Mrs Dickinson’s application is supported by the evidence of Mr Dickinson in his witness statements dated 10 October 2013 and 9 January 2014, and of Mr James Broadbent in his witness statements dated 11 October 2013 and 10 January 2014. Network Rail’s evidence opposing Mr and Mrs Dickinson’s application, and in support of its application for an order joining Thomson Broadbent, is contained in the witness statement of Mr Philip Glynn dated 25 October 2013.

 

 

 

Section 29 of the Tribunals, Courts and Enforcement Act 2007

 

5.      Section 29 of the Tribunals, Courts and Enforcement Act 2007 (“the 2007 Act”) provides:

 

“29. Costs or expenses

 

(1) The costs of and incidental to –

 

(a)    all proceedings in the First-tier Tribunal, and

 

(b)   all proceedings in the Upper Tribunal,

 

shall be in the discretion of the Tribunal in which the proceedings take place.

 

(2) The relevant Tribunal shall have full power to determine by whom and to what extent the costs are to be paid.

 

(3) Subsections (1) and (2) have effect subject to Tribunal Procedure Rules.

 

(4) In any proceedings mentioned in subsection (1), the relevant Tribunal may –

 

(a)    disallow, or

 

(b)   (as the case may be) order the legal or other representative concerned to meet,

 

the whole of any wasted costs or such part of them as may be determined in accordance with Tribunal Procedure Rules.

 

(5) In subsection (4) “wasted costs” means any costs incurred by a party –

 

(a)    as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative, or

 

(b)   which, in the light of any such act or omission occurring after they were incurred, the relevant Tribunal considers it is unreasonable to expect that party to pay.

 

(6)   In this section “legal or other representative”, in relation to a party to proceedings, means any person exercising a right of audience or right to conduct the proceedings on his behalf.

 

… ”.

 

 

 

Rule 10 of the 2010 Procedure Rules, as amended

 

6.      As now amended by the Tribunal Procedure (Amendment No. 3) Rules 2013 (“the 2013 Procedure Amendment Rules”), rule 10 of the 2010 Procedure Rules provides:

 

“Orders for costs

 

10. – (1) The Tribunal may make an order for costs on an application or on its own initiative.

 

(2) Any order under paragraph (1) –

 

(a)                may only be made in accordance with the conditions or in the circumstances referred to in paragraphs (3) to (6);

 

(b)               must, in a case to which section 4 of [the Land Compensation Act 1961] applies, be in accordance with the provisions of that section.

 

(3) The Tribunal may in any proceedings make an order for costs –

 

(a)                under section 29(4) of the 2007 Act (wasted costs) and for costs incurred in applying for an order for such costs;

 

(b)                if the Tribunal considers that a party or its representative has acted unreasonably in bringing, defending or conducting the proceedings; or

 

(c)                in the circumstances to which paragraph (14) refers.

 

(4) Except in proceedings to which paragraph (5) and (6) apply, the Tribunal may –

 

(a)                with the consent of the parties, or

 

(b)               where there is a disparity of interest or resources between the parties,

 

direct that an order for costs may be made in the proceedings against one or more of the parties in respect of costs incurred following such a direction.

 

(5) The Tribunal may make an order for costs in judicial review proceedings.

 

(6) The Tribunal may make an order for costs in proceedings –

 

(a)                for compensation for compulsory purchase;

 

(b)               for injurious affection of land;

 

(c)                under section 84 of the Law of Property Act 1925 (discharge or modification of restrictive covenants affecting land);

 

(d)               on an appeal from a decision of the Valuation Tribunal for England or the Valuation Tribunal for Wales.

 

(7) Subject to paragraph (3), in proceedings to which paragraph (6) applies, the Tribunal may direct that no order for costs may be made against one or more specified parties in respect of costs subsequently incurred.

 

(8) In proceedings to which paragraph (6) applies, the Tribunal must have regard to the size and nature of the matters in dispute.

 

…”.  

 

 

 

Mr and Mrs Dickinson’s application for an order under rule 10(7)

 

7.      Mr Saoul submitted that the principles underlying qualified one-way costs shifting in civil litigation can be applied to proceedings of this kind in the Tribunal. In its report of December 2011 to the Senior President of Tribunals, “Costs in Tribunals”, the Costs Review Group recommended that in cases such as this there should generally be no costs shifting at all, except in cases of unreasonable conduct (see paragraph 91 of the report). The power of the Tribunal to disapply the regime of two-way costs shifting in proceedings for injurious affection of land is now expressly provided in rule 10(7) of the 2010 Procedure Rules. This case, said Mr Saoul, is clearly one in which the Tribunal ought to grant costs protection to a claimant at an early stage in the reference. Mr and Mrs Dickinson should be put in a similar position to claimants in other proceedings following the implementation of the Jackson reforms. Rules guarding against full costs shifting reflect a policy that claimants of modest means should not be discouraged from pursuing respectable claims against deep-pocketed defendants because of the risk of a substantial liability in costs if the claim should fail. Mr and Mrs Dickinson simply cannot afford to take that risk. They have no income, and only modest savings. The property is their home. The Tribunal should grant the order sought in the interests of access to justice. Mr and Mrs Dickinson are facing an extremely well-resourced compensating authority. Their claim is of moderate value and not obviously without merit. It should not be stifled by the risk of an adverse order for costs. Refusing the application would go against the Tribunal’s aim to provide an efficient, cost-effective and fair way of resolving disputes such as this.

 

8.      Mr Saoul said Network Rail’s resistance to the application was misconceived. He made three main points. First, Mr and Mrs Dickinson have been candid about their potential liability in costs. They will have to pay their solicitors’ fees, but they have an indemnity for those fees from Thomson Broadbent. Thomson Broadbent have also agreed to act on a “no win, no fee” basis. So they will not recover any fees of their own if the claim should fail. Their position is essentially the same as that of a solicitor retained on a conditional fee agreement. The fact that Mr and Mrs Dickinson are protected for their own costs is in no way inconsistent with their seeking an order to protect them against any liability for the costs incurred by Network Rail. Secondly, the fact that Network Rail are facing other claims in which Thomson Broadbent are instructed is irrelevant here. If applications under rule 10(7) are made in those other cases they will be decided on their own merits. And thirdly, it should not be forgotten that the Tribunal has a discretion, under rule 10(3)(b), to make an order for costs against Mr and Mrs Dickinson if they act unreasonably.

 

9.      Mr Klein submitted that too much can be made of the disparity in resources between the two sides. If the claim fails Mr and Mrs Dickinson will only be faced, at worst, with a liability for Network Rail’s costs reasonably and proportionately incurred. Network Rail’s own resources are irrelevant. In most litigation the complaint that a litigant will be deterred from litigating if he is at risk of an order for costs being made against him is not, in itself, a good reason for excluding that risk. Almost every claim of this kind is a dispute between an individual householder and a public body. Despite the recent amendments to rule 10, and even though in many claims before the Tribunal the parties now find themselves under a no-costs regime, the principle of two-way costs shifting continues to apply to Part 1 compensation claims. In civil litigation, following the Jackson reforms, two-way costs shifting would apply to a case of comparable value and complexity.

 

10.  Mr Klein argued that the order sought by Mr and Mrs Dickinson would not promote justice; it would lead to real injustice, contrary to the overriding objective. First, he submitted, the order would be inherently unfair. One side would be at no risk in costs, whereas the other would be at risk not only for its own costs but for the other side’s as well. With no prospect of recovering its costs Network Rail may be forced to settle a claim of dubious merit. This is not a trivial case. The costs estimate submitted on behalf of Mr and Mrs Dickinson – for about £20,000 – seems far too low. They have claimed a substantial sum in compensation. There will be experts on both sides. If the claim succeeds Mr and Mrs Dickinson will be able to seek an order for costs against Network Rail. If it fails they will not have to pay Thomson Broadbent, nor will they have to bear the fees of their own experts and solicitors. If they are at no risk in costs there will be no incentive for them to settle the claim. There is real danger here that Network Rail’s costs will be needlessly increased. Rule 10(3) does not protect them against that danger. Secondly, the suggestion that Mr and Mrs Dickinson are unable to fund these proceedings from their own resources is wrong. The property itself is said to have been worth £210,000 in December 2009, and there is no mortgage on it. They also own a holiday home abroad. They have savings of £97,000. Mr Dickinson has two pensions, both of which he will be able to draw upon within the next two years. Thirdly, Thomson Broadbent obviously see this as a test case, likely to set a precedent for claims which many other clients of theirs may seek to pursue. If the order sought by Mr and Mrs Dickinson is made, similar orders may be made in many more references too.

 

11.  Mr Klein acknowledged that the Tribunal might think it right to make an order giving Mr and Mrs Dickinson some protection in costs. If so, it should impose a costs cap on either side – as the court will sometimes do under rule 3.19 of the Civil Procedure Rules. In this case an appropriate level would be £30,000. If the claim succeeded in full Network Rail would probably have to pay their own costs, and would also be liable for up to £30,000 in costs to Mr and Mrs Dickinson. If the claim were to fail, and assuming that the indemnity was still in place, Mr and Mrs Dickinson would have no liability for their own costs but would be liable for up to £30,000 of Network Rail’s. Network Rail would still be substantially out of pocket once they had met their own irrecoverable costs. If the indemnity was no longer in place, and if Mr and Mrs Dickinson’s costs estimate is accurate, they would have to meet some of their own costs, but they would be well able to do that from their own resources. Another option would be to impose a cap only on the costs Network Rail could recover if they successfully resist the claim. In a letter to Mr and Mrs Dickinson’s solicitors dated 5 February 2014 their solicitors confirmed that they would “willingly submit” to a cap on their own recoverable costs, and suggested that this should be set at £30,000.

 

12.  Both parties criticized each other’s conduct. Mr and Mrs Dickinson complained that Network Rail had behaved in a heavy-handed way from the outset and had refused to engage in negotiations with a view to settling the claim. Network Rail denied that. It was Mr and Mrs Dickinson and Thomson Broadbent whose stance was unreasonable. They were only prepared to negotiate on the basis that the claim was well founded and that compensation was going to have to be paid.

 

13.  Some general principles seem not to be in dispute.

 

14.  First, the parties agree that following the amendments made to the 2010 Procedure Rules by the 2013 Procedure Amendment Rules the Tribunal retains a very broad discretion in making orders for costs. Under section 29(2) of the 2007 Act it has the power to determine by whom and “to what extent” the costs of proceedings before it are to be paid. The parties agree that the provisions of rule 10 ought to be applied with reasonable flexibility, in the light of the particular circumstances of the case in hand. The aim should always be to achieve the overriding objective, which is enshrined in rule 2 of the 2010 Procedure Rules. An order for costs which is reasonable and proportionate in one case may not be so in another.

 

15.  Secondly, rule 10 distinguishes between two types of proceedings: those encompassed in paragraphs (5) and (6), in which the Tribunal has an express power to make an order for costs, and those to which paragraphs (5) and (6) do not apply. For proceedings other than those within paragraphs (5) and (6), paragraph (4) provides a power for the Tribunal, either with the parties’ consent or where there is “a disparity of interest or resources” between them, to direct that one or more of them may nevertheless be liable to another for costs incurred after the direction is made. Implicit in this provision is that the respective resources of the parties may justify protecting one of them from the conduct of the other in the proceedings. But this does not mean that a disparity in resources between the parties is irrelevant in the context of proceedings within paragraphs (5) and (6). There will be cases within the scope of those two paragraphs in which a disparity in resources is an important consideration in the Tribunal’s decisions on costs.    

 

16.  Thirdly, for the four categories of proceedings referred to in rule 10(6), one of which is a claim for compensation for injurious affection of land, rule 10(7) allows for a decision that “no order for costs” may be made against a party or parties for costs subsequently incurred. The power to make such a direction is subject to the general power of the Tribunal under section 29(4) of the 2007 Act and rule 10(3) to make wasted costs orders and awards of costs where a party has behaved unreasonably. Under rule 10(8) a mandatory consideration for the Tribunal when making its decision on costs in any proceedings to which rule 10(6) applies is “the size and nature of the matters in dispute”. An order of the kind referred to in rule 10(7) would have the effect of entirely removing the exposure of one side, or both sides, to an adverse award of costs. In some cases that will be appropriate. But this express power to take away the risk of any order for costs being made against a party does not exclude the making of an order limiting the future liability in costs of one or more of the parties to a particular level specified by the Tribunal – either with or without a reciprocal cap on the potential liability in costs of the other. Though neither side in this case has sought such an order, they both accept that the Tribunal’s jurisdiction in costs extends to making costs capping orders in proceedings of this kind.

 

17.  In my view those general principles should inform the Tribunal’s approach to this application.

 

18.   The order sought by Mr and Mrs Dickinson would give them complete protection from any future order for costs being made against them, no matter what the outcome of their claim might be, subject to the Tribunal’s power under rule 10(3) to make wasted costs orders and orders for costs against parties or their representatives for unreasonable behaviour.

 

19.  That would be the effect of an order made in accordance with rule 10(7). It would not be the normal position in a claim for compensation for injurious affection. The normal position would be that at the end of the proceedings the Tribunal would consider any application for costs made to it, and determine that application in the light of its decision on the claim.

 

20.  Proceedings “for injurious affection of land” lie within the Tribunal’s first instance jurisdiction. When rule 10 was amended, such proceedings were not excluded from the regime of two-way costs shifting in paragraph (6), though paragraph (7) provides for the Tribunal to disapply that regime in a particular case. This was a conscious decision of the Tribunal Procedure Committee (see paragraphs 96 and 97 of its report “Consultation on proposed changes to the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010” and paragraphs 6.39 and 6.40 of its report “Replies from the Tribunals Procedure Committee” of June 2013, in which it considered the consultation responses). It was taken in the light of the recommendation of the Costs Review Group, in paragraph 91 of its report, that “a standard no-costs regime” should apply to the Tribunal’s jurisdiction in proceedings for injurious affection, qualified by provisions to allow for costs to be awarded when a party had behaved unreasonably, and “subject to a power for the tribunal to order that costs-shifting should apply in an individual case – either two-way ([e.g.,] because of complexity or the amount in issue) or one-way (e.g., because of imbalance between the parties in terms of resources or the significance of the outcome, for instance where there are many claims for compensation in respect of noise from a new road scheme and the claim is essentially a test case)”.

 

21.  It is not difficult to see why Network Rail, as a compensating authority, would strongly oppose an application of the kind Mr and Mrs Dickinson have made in this case. And I can see some force in Mr Klein’s submissions.

 

22.  An order granting Mr and Mrs Dickinson complete protection in costs from this point in the proceedings, whilst leaving Network Rail fully at risk, would transform the dynamics of the case. I cannot accept that if such an order is not made Mr and Mrs Dickinson will be denied access to justice or left unable to pursue their claim effectively. They are already safeguarded by their arrangement with Thomson Broadbent. And in my opinion the evidence they have presented to the Tribunal does not demonstrate that unless they are shielded from any future liability in costs to Network Rail they will be unable or unwilling to go on. The claim is not obviously hopeless. It may or may not prove to be well founded. But I do not think that the order Mr and Mrs Dickinson are seeking can be justified by the size and nature of the matters in dispute. The claim is being dealt with in the standard procedure. The issues it raises are not unduly complex. And the amount of compensation which has been claimed is not unusually large, even in a case where the Tribunal is concerned only with injurious affection.

 

23.  I therefore accept Mr Klein’s submission that Mr and Mrs Dickinson do not need an order in the terms contemplated by rule 10(7). I also accept that such an order would be unlikely to stimulate negotiations towards a realistic settlement, or the narrowing of issues of fact and expert judgment with which the Tribunal is going to be faced. It would not be conducive to keeping the costs of the reference reasonably in check. To that extent I accept Mr Klein’s submission that such an order would be hard to reconcile with the overriding objective. Conferring complete immunity from costs upon Mr and Mrs Dickinson at this stage, subject only to the recourse Network Rail might have to rule 10(3), would not be to deal with matters fairly and justly for both parties. There would have to be a compelling reason for the Tribunal to take that course, and I do not see that in Mr Saoul’s submissions or in the evidence produced in support of the application.

 

24.  I am therefore unable to accept that Mr and Mrs Dickinson should be granted total costs protection under rule 10(7).

 

25.  However, I must also consider whether the Tribunal should exercise some control over costs at this stage.

 

26.  As Mr Klein submitted, the court’s jurisdiction to make costs capping orders is well established. The court may make such an order against any of the parties to the proceedings if it is in the interests of justice to do so, if there is a substantial risk of costs being disproportionately incurred and if it is not satisfied that this risk can be adequately controlled by case management or by the detailed assessment of costs (rule 3.19(5) of the Civil Procedure Rules). The court will consider all of the circumstances of the case, including “whether there is a substantial imbalance between the financial position of the parties” (rule 3.19(6)(a)). A costs capping order may be varied if circumstances change, or if there is some other compelling reason to do so (rule 3.19(7)).

 

27.  In public law proceedings the practice of making protective costs orders, and orders in Aarhus Convention claims (under rule 45.41 to 44 of the Civil Procedure Rules) is also firmly established as a means of guarding against prohibitive costs. The scope of articles 9.3 and 9.4 of the Aarhus Convention has recently been considered by the Court of Appeal in Austin v Miller Argent (South Wales) Limited [2014] EWCA Civ 1012. In that case it was held that a claim in private nuisance in which there was “a close link between the claim and the environmental matters regulated by the Convention” was in principle capable of attracting the costs protection under article 9.4. But that protection would not be available if “the purpose of the claim was principally to protect private property interests and any public benefit was limited and incidental” (see paragraph 22 of the judgment of the court).   

 

28.  The context here is different. These are not public law proceedings. Nor are they private law proceedings with a dimension of wider public interest. The claim before the Tribunal is a claim for compensation for injurious affection to privately owned land. Where costs are concerned such a claim falls squarely within the ambit of rule 10(6), (7) and (8).

 

29.  In my view this is a case in which the Tribunal should exercise its discretion to limit a claimant’s potential liability in costs.

 

30.  I have in mind “the size and nature of the matters in dispute”, and Mr Saoul’s submission that there is a stark disparity in resources between the two sides – an inequality in arms which, he argued, will cause injustice and unfairness in the proceedings unless the Tribunal redresses it now.

 

31.  As Mr Klein submitted, a difference in resources between one party and another is a fact of life in most civil litigation. In proceedings before the Tribunal such as these it is normal. But an imbalance in resources is not automatically a good reason for departing from the regime of two-way costs shifting. The Tribunal must focus not merely on the resources of either side, or even on the scale of difference between one side’s resources and the other’s. The crucial question, in my view, is whether the imbalance might prevent the less well resourced party from participating effectively in the proceedings, and, if so, what order the Tribunal should make in the interests of fairness and justice.

 

32.  The fact – if it is a fact – that this reference is seen by Thomson Broadbent as a test case does not, in itself, support the argument against limiting Mr and Mrs Dickinson’s future liability in costs. Network Rail do not accept that this is a test case. But they are clearly anxious about any decision on costs in these proceedings setting a precedent for similar orders in others that follow. I understand that. But the answer to Network Rail’s concern is that decisions on costs in proceedings before the Tribunal, as in other proceedings, are always made in the light of the circumstances of that particular case. If a costs capping order is made in this case it does not follow that an order in the same or similar terms will be appropriate in another case where the circumstances are different. And if this does turn out to be a test case, or at least if there are issues in it which arise in other proceedings as well, the Tribunal’s decision on the claim may lead in the end to some saving in costs for Network Rail.

 

33.  I accept that the arrangement Mr and Mrs Dickinson have been able to make with Thomson Broadbent is clearly relevant to my decision on the capping of costs. That arrangement protects Mr and Mrs Dickinson in two ways. They have an indemnity for professional fees which they would otherwise have to meet out of their own pocket, and a “no win, no fee” agreement with Thomson Broadbent themselves. Safeguards such as these must inform the Tribunal’s decision on whether the costs Network Rail will be able to recover against them should be capped, the level of any such cap, and whether there should be a reciprocal cap for the benefit of Network Rail.

 

34.  On the evidence before me and the submissions I have heard I have concluded that an order should be made at this stage capping the costs which Network Rail will be able to recover from Mr and Mrs Dickinson. I do not think that a reciprocal cap on Network Rail’s potential liability in costs is warranted. In my view the right order to make is one limiting Mr and Mrs Dickinson’s future costs liability to £15,000. This, I believe, will serve the overriding objective. It will provide a sufficient level of costs protection for Mr and Mrs Dickinson, given the amount of compensation they have claimed and the issues likely to be in dispute. And I think it will also maintain, on both sides, a sense of realism and proportion in the conduct of the reference from now on. I recognize that circumstances may change before the hearing takes place. Both parties will therefore have liberty to apply.

 

 

 

The application to join Thomson Broadbent

 

35.  Counsel made elaborate submissions on Network Rail’s application for an order to join Thomson Broadbent to the reference, but the thrust of the argument on either side was simple. Mr Klein submitted that Thomson Broadbent’s conduct of the proceedings for Mr and Mrs Dickinson shows it will probably be necessary to make an order for costs against them; so they should be joined as a party to the reference now. Mr Saoul’s response was that the allegations made about Thomson Broadbent’s conduct were unfounded and the application to join them unnecessary.

 

36.  Mr Klein relied on the Tribunal’s broad discretion as to costs under section 29(1) and (2) of the 2007 Act, which is equivalent, he said, to the court’s under section 51(1) and (3) of the Senior Courts Act 1981. Nowadays, he said, the court regularly makes third party costs orders under rule 46.2 of the Civil Procedure Rules. The Tribunal can also do that in the exercise of its discretion under section 29 of the 2007 Act, even though there is no specific provision for it in the 2010 Procedure Rules. A third party costs order ought always to be made if it would be in the interests of justice to do so – such as when the third party has sought to use the proceedings to advance its own interests and has funded those proceedings (see, for example, the decision of the Privy Council in Dymocks Franchise Systems (NSW) Pty. Ltd. v Todd [2004] 1 WLR 2807, at paragraphs 25, 26 and 29). Under rule 9 of the 2010 Procedure Rules the Tribunal has a general discretion to make an order “adding, substituting or removing a party in any proceedings”. When exercising that discretion the Tribunal must have in mind the overriding objective. In particular, it should have in mind rule 2(2)(c), which envisages that all interested parties will be able to participate in proceedings. It should add a party if it is satisfied that an order for costs may have to be made against that party (see the judgment of Morgan J. in PR Records Ltd. v Vinyl 2000 Ltd. [2008] 1 Costs L.R. 19, at paragraphs 38 to 47).

 

37.  Mr Klein submitted that in this case the grounds for adding Thomson Broadbent as a party to the reference are compelling. It seems clear that they are not only exercising control over the reference but also, as they told the Tribunal in their letter to the Registrar dated 2 July 2013, that they have a “financial interest” in it. When referring to this claim and the 37 others in which Thomson Broadbent are instructed, Mr Broadbent says that in each of these cases they have “retained” their clients “on a “no win, no fee” basis” (paragraph 9 of his first witness statement). They obviously regard these clients as a group. But, as Mr Broadbent confirms (in paragraph 16 of his first witness statement), they advised that a reference should be made in this case. None of their other clients has yet made a reference. This reinforces the impression that Mr and Mrs Dickinson’s claim is being used as a test case. The strategy seems to be to press on with their claim first, and to use it to establish a tone. It was clearly Thomson Broadbent who selected and instructed Mr and Mrs Dickinson’s solicitors, despite having said in their letter of 2 July 2013 that “[the] client will … not be appointing solicitors, barristers or technical experts …”. Mr Dickinson makes this plain in his evidence (in paragraph 22 of his first witness statement). All of this is strong evidence of the proceedings being controlled by Thomson Broadbent. So is the indemnity.

 

38.  In response to those submissions Mr Saoul pointed out that there is no explicit provision either in the 2007 Act or in the 2010 Procedure Rules for the Tribunal to make an order to join a party’s professional representatives to proceedings simply because the other party is minded to seek costs against them. Rule 10(3) provides for a wasted costs order to be made if the Tribunal considers that the representative of a party has acted unreasonably in the proceedings. The definition of “wasted costs” in section 29(5) of the 2007 Act indicates that such orders may be made against a party’s representative only where that person has behaved improperly, unreasonably or negligently. Whether such an application might be justified later in these proceedings can be no more than conjecture. Unless Network Rail can demonstrate that there is likely to be a sound basis for it, which they cannot, there is no reason to join Thomson Broadbent at this stage. To threaten an application for costs against a party’s representative simply because he is acting on a “no win, no fee” arrangement, and to base an application for joinder on that threat, is unacceptable. Otherwise, there would be a strong deterrent to professional advisers agreeing to act on those terms. That would compromise access to justice for claimants like Mr and Mrs Dickinson.

 

39.  I can deal with this application quite shortly.

 

40.  I accept Mr Klein’s submission that the Tribunal’s power to join an additional party to a reference, under rule 9 of the 2010 Procedure Rules, may be used to join a party whose only role in the proceedings would be to respond to an application for costs. Rule 9 is framed in wide terms, which do not preclude such an order being made if it is necessary to do so. I am therefore in no doubt that I have the power to make the order Network Rail are asking me to make, and that I have the power to do so at this early stage in the reference.

 

41.  I can see why Network Rail would be keen to make an application for costs against Thomson Broadbent if, in their view, such an application was justified. But I am not convinced that it is appropriate to make an order joining Thomson Broadbent as a party to the proceedings now. I do not think there is any need for this to be done to protect either Network Rail or Thomson Broadbent, or, indeed, Mr and Mrs Dickinson themselves. The evidence which shows how Thomson Broadbent have acted in this case thus far does not seem to me to support the suggestion that they have behaved in such a way as to expose themselves to the risk of a wasted costs order being made against them, or Mr and Mrs Dickinson to a similar risk. I am not going to prejudge any application Network Rail may make under rule 10(3). At this stage, however, I am not satisfied on the material before me that Thomson Broadbent are manipulating the proceedings to advance their own interests, or that they have yet acted unreasonably in some other way.         

 

42.  I accept that this matter may need to be revisited in the course of the reference. I am not encouraging Network Rail to make a further application to join Thomson Broadbent as a party, or to seek an order for costs under rule 10(3). It will be for them to consider whether such applications can properly be argued before the Tribunal on evidence that is clear and convincing.

 

 

 

Conclusion

 

43.  For the reasons I have given both of these applications fail.

 

44.  I shall make an order (1) dismissing Mr and Mrs Dickinson’s application for an order under rule 10(7) of the 2010 Procedure Rules; (2) dismissing Network Rail’s application for an order to join Thomson Broadbent as a party to the reference; (3) without prejudice to any application which may later be made by Network Rail under rule 10(3), limiting the costs incurred after the date of the order which Network Rail will be able to recover from Mr and Mrs Dickinson to £15,000, inclusive of disbursements and VAT; (4) requiring – as the parties have agreed – that Mr and Mrs Dickinson pay Network Rail £1,000 in full and final settlement of Network Rail’s applications of 25 October 2013 for an order that Mr and Mrs Dickinson pay their costs wasted on the statement of case dated 26 February 2013, the costs of their application dated 3 April 2013 for an order that an amended statement of case be filed and served, and the costs of their application for directions dated 29 August 2013; (5) requiring the parties, within 28 days, to file their draft agreed directions for the future conduct of the reference, or, failing agreement, to apply to the Registrar for further directions; and (6) giving each party liberty to apply to the Tribunal to vary or set aside the order on not less than two days’ notice in writing to the other party.

 

 

 

 

 

              Dated: 29 August 2014

 

 

 

 

Sir Keith Lindblom, President