The First-Tier Tribunal and Costs

Return to Articles list


Case: Carr v Evelyn [2020] First-tier Tribunal

Carr v Evelyn Part 2

    1. If a case has to be fought, it is good to win. It is even better to win twice in the same case. That is what has happened in the case of Carr v Evelyn in the First-tier Tribunal.
    1. In September 2019, I wrote about the Decision of the First-tier Tribunal, dismissing the Landlords’ application for consent to the operation of a notice to quit given in reliance on sound estate management. The article appears on our website.
    1. On 8 April 2020, the Tribunal gave its reasons for its further decision, awarding costs against the Landlords and on the indemnity basis.
    1. The Decision is important, not only as regards the approach of the First-tier Tribunal to costs, but because of its wider application in relation to the award of costs on the indemnity basis.
Costs in the ALT
    1. Historically, when the Tribunal was still the much missed Agricultural Land Tribunal (as it still is in Wales), costs were seldom awarded against an unsuccessful party. Under the old rules, costs would only be awarded against an unsuccessful party who had acted ‘frivolously, vexatiously or oppressively’.
The new (ish) costs regime
    1. The jurisdiction for the award of costs before the First-tier Tribunal is now contained in section 29 of the Tribunal Courts and Enforcement Act 2007. Sub-section 29(1) provides that the Tribunal shall have a discretion to award costs. Sub-section 29(2) provides that the relevant Tribunal ‘shall have full power to determine by whom and what extent costs are to be paid’. Sub-section 29(3) qualifies those provisions making them subject to the Tribunal Procedure Rules.
The 2013 Rules
    1. The relevant Tribunal Procedure Rules for the First-tier Tribunal are the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (‘the 2013 Rules’). Rule 13 provides that the Tribunal ‘may make an order in respect of costs only… if a person has acted unreasonably in bringing, defending or conducting proceedings in… an agricultural land and drainage case’. The Tribunal can make a summary assessment of costs or (as in the Carr v Evelyn case) remit costs to a Costs Judge. Rule 3(3) of the 2013 Rules provides that effect is to be given to the overriding objective, namely the objective of dealing with cases fairly and justly.
An objective test
    1. The Tribunal is, therefore, required to apply an objective test as to whether a party has behaved unreasonably in bringing, defending or conducting the proceedings in question. That finding is not a matter of discretion, but requires the Tribunal to apply an objective standard of conduct. If, but only if, the Tribunal, applying that standard, holds that the conduct of a party, in bringing, or in defending or in conducting the proceedings has been unreasonable, does the Tribunal move to the twofold discretionary element involved in the exercise of power created by the Rules.
The discretionary elements
    1. The first part of that discretion involves the consideration as to whether, even where there is a finding of unreasonable conduct, it is appropriate to make an order for costs. The second part of the discretion only arises where the Tribunal, acting judicially, decides that an order for costs should be made and, as a consequence, moves on to consider the precise order to be made. However, unlike in court, where the general rule exists that a successful party should be paid his (or her) costs (in accordance with rule 44.2(2)(a) of the Civil Procedure Rules), even if unreasonable conduct is found to exist, it does not necessarily lead to the Tribunal ordering that the party in question must pay the entirety of the other party’s costs.
    1. In making its determination in the Carr v Evelyn case, the Tribunal relied, in particular, on the decision of the Upper Tribunal (Land’s Chamber) in Willow Court Management Co (1985) Limited v Alexander [2016] UKUT 290 (LC). The motive of a party in bringing proceedings may be relevant in determining the reasonableness or otherwise of the unsuccessful party. Unreasonable conduct is not limited to vexatious conduct or harassment.
The arguments in Carr v Evelyn
    1. In support of his application for costs against of the Landlords, Mr Carr relied on six matters;
      • The fact that the Landlords’ opposition to his succession application and their pursuit of the sound estate management notice to quit was based on the antipathy of the Landlords or, more particularly, their agent, and the desire to remove the Carr family from the estate.
      • The fact that the Landlords made use of an expert witness who in truth was ‘a hired gun’ put forward to make the Landlords case with evidence tailored to that purpose.
      • The fact the Landlords sought to use their own failure, in breach of their repairing covenant, to keep the structure of certain farm buildings in proper repair, as part of the argument that consent should be given to the operation of the notice to quit.
      • The fact that, without reasonable foundation, the Landlords have made allegations, ultimately not pursued, as the quality of husbandry on the Holding.
      • The fact that, in relation to suitability for succession, the Landlords, until faced with Mr Carr’s answers under cross examination, have chosen to allege that the family’s finances had been ‘manipulated’ to satisfy the livelihood requirement.
      • The fact that, although ultimately not pursued in final submissions, the Landlords chose to bring in to play a number of historic allegations said to go to the integrity of Mr Carr and/or his late father, relevant, it was said, to the suitability of Mr Carr to succeed to the tenancy of the holding.
    1. In its 21 page decision, the Tribunal considers each of those matters, recognising that the latter four, each taken in isolation, would not warrant, even if constituting, or amounting to, unreasonable conduct, the making of any separate orders for costs against Landlords.
Costs of the succession application
    1. The Tribunal was considering the costs of the entirety of the proceedings before it, not limited to the sound estate management argument. As explained in my previous article, that argument piggybacked on the initial opposition to Mr Carr’s succession application. The Tribunal was not prepared to award costs against the Landlords in relation to the succession application that was ultimately conceded before the substantive hearing. This explains why the Tribunal awarded Mr Carr 80% of the totality of his costs: 20% being the estimate of the succession aspect.
A finding of unreasonableness
    1. The key test applied is whether these can be a reasonable explanation for the unsuccessful party’s conduct. The Tribunal found that the most obvious area in which the Landlords’ conduct had been unreasonable and, manifestly, not susceptible of reasonable explanation, was the role of one of the ‘so called independent experts’. One of the experts was described as a ‘hired gun’, ie. part of the ‘litigation team’. That conduct was found to be at the heart of the Landlords’ case. The Landlords’ conduct in respect of the role of the expert was ‘both unreasonable and reprehensible’.
    1. The Tribunal decided that this behaviour demonstrated that the Landlords were, for the reasons and motives referred to, so set upon precluding Mr Carr from succeeding to the tenancy of the Holding that they pursued the application for sound estate management ‘without any serious consideration of its realistic merits’. The Tribunal found that a reasonable landlord would necessarily have considered a number of salient matters, namely;
      • That Mr Carr was an experienced, capable and successful farmer who, as ultimately conceded by the Landlords, farmed to the highest standards of husbandry and who was, on that footing, eminently suitable to succeed to the tenancy.
      • That the three principal Holdings on the estate were viable, as they stood, and that amalgamation was not necessary to remedy a lack of existing viability, or to meet any immediate need to preserve the existing farming in the husbandry of the estate.
      • The release of buildings on the Holding, on the grounds that they were not in a fit state of repair for use in a modern farming operation, in circumstances where their state of repair flowed from the Landlords’ own failure to carry out their covenanted obligation to repair, was unlikely to find favour as desirable on the grounds of sound estate management.
      • In circumstances where a viable status quo existed, where the existing husbandry was to a high standard, and where the principal grounds for proposed to amalgamation was said to be that this would best protect the amalgamated Holdings against future uncertainties which may face agriculture and that it would enable a mixed farming operation to be carried out, it would be incumbent upon the Landlords to provide convincing evidence, rather than assertion, or generic propositions.
      • In circumstances where the core proposal was said to be intended to strengthen the ability of the remaining farms on the estate to sustain themselves in difficult times, it was fundamental that the proposals would strengthen and not weaken, or destabilise, either of those businesses and that the businesses (or any of them) supposedly strengthened by the Landlords’ proposals were not put at risk.
    1. The Tribunal concluded that no such evaluation was ever attempted. Counsel for the Landlords argued that the merits of the application was reflected in the fact that Mr Carr’s legal advisers took it seriously. But as the Tribunal said ‘They had no option but to do so’.
Indemnity costs
    1. Finally, the Tribunal considered whether the award of costs should be on what is called the standard basis or, the more unusual, indemnity basis.
    1. Indemnity costs means that:
      • whereas standard basis costs must be reasonable and proportionate, indemnity basis costs must only be reasonable; and
      • standard basis costs must be shown by the party claiming them to be reasonable and proportionate, whereas indemnity costs requires the paying party to show that they are unreasonable.
    1. The Tribunal decided that indemnity costs should be awarded, drawing on the decisions in Three Rivers District Council v The Governor and Company of the Bank of England [2006] EWHC 816 (Comm) and, more recently, Burgess v Lejonvarn [2019] EWHC 369 (TCC). The Tribunal decided that the Landlords’ conduct has been ‘outside the norm’. Would a reasonable party conclude that his case was so speculative or weak that it should not be pursued? Again, the role of the expert was central to that finding that it was outside the norm, resulting in costs on the indemnity basis.

Plenty of food for thought.

© P R Williams

May 2020

P R Williams, Ebery Williams – Author of Scammell, Densham & Williams Law of Agricultural Holdings

Return to Articles list