On the Second Day of Christmas – Nadia Khan

On the second day of Christmas...Today Nadia Khan from Irwin Mitchell’s Real Estate Disputes team examines the case of A Grantor v A Grantee which sets out the Tribunal’s jurisdiction in relation to awarding costs when it acts as an Arbitrator.

The Upper Tribunal (Lands Chamber) considered whether it had jurisdiction to award costs in circumstances where it had acted as an arbitrator and had allowed the claimant landowner and grantor’s claim for compensation for ‘injurious affection’. The Upper Tribunal refused the grantee’s (respondent’s) argument that the tribunal had no jurisdiction to award costs against it. 

The claimant was the current owner of land, where a pipeline ran through, pursuant to a deed of grant of easement of which the respondent had the benefit. The pipeline was placed consensually, without exercising compulsory purchase powers. The deed of grant included a clause providing for compensation to be payable to the claimant if the development was prevented due to the pipeline. It also included an arbitration clause providing for a reference to the Upper Tribunal to determine the quantum of that compensation. The deed made no mention to costs. As a result, an issue arose as to whether the Tribunal had jurisdiction to make an award for costs. 

The Upper Tribunal held that the tribunal had the power to award costs under r10(6)(b) of the Tribunal Procedure (Lands Chamber) Rules 2010, SI 2010/2600 as amended (“2010 Rules”), on the basis that the claimant had pleaded the claim under s7 of the Compulsory Purchase Act 1965 as a claim for injurious affection of land. In addition, when the tribunal had acted as an arbitrator to determine the reference by consent under s1(5) of the Lands Tribunal Act 1949, it had no power to award costs under s61 of the Arbitration Act 1996, it had the power to do so under 10(6)(b) of the 2010 Rules. 

Why is this important?

This case determines an important point of law in the Tribunal’s jurisdiction in relation to the context of significant amendments to the rules of awarding costs. 

The ruling carefully binds the Tribunal’s jurisdictions to award costs and to sit as an arbitrator in reference by consent, and the relevance of the Arbitration Act 1996. Significantly, the case determines that where the Upper Tribunal sits as an arbitrator, in reference by consent, the 1996 Act does not apply save for those provisions identified in rule 30 of the 2010 Rules. Section 61, which deals with awards of costs, is not one of those provisions and therefore does not apply. 

The Tribunal’s only jurisdiction to award costs is set out in rule 10 of the 2010 Rules. That rule only provides for costs to be payable in particular cases. Although, the Tribunal accepted that this reference was one concerning ‘injurious affection’ within rule 10(6)(b), not all disputes will fall within the identified categories. In such instances, a costs award would only be made in the case of unreasonable conduct or when parties have agreed that costs would be payable in accordance with rule 10(4).