Little boxes

One of the features of reaching the plateau of middle age, is being able to look back at the steps along the way. 20 years ago, I undertook a raft of detailed assessments in housing disrepair claims before Master O’Hare, which came to judgment in early 2004 as set out here: Bowen v Bridgend CBC. The context of the case, was that more and more claims for housing disrepair were being brought against a local authority, with the real potential to consume a large part of its budget through not only the payment of damages, but particularly the payment of legal costs of those claims.

To the current generation of lawyers, who came into practice long after the repeal of the Conditional Fee Agreements Regulations 2000, or even the abolitition of recoverable additional liabilities in April 2013, the issues, and the arguments may seem positively antique, but as with all legal arguments, once they are peeled back, they are simply tools to an end, and that end is unpeeling where the justice of a particular case lies.

Another feature, is that because one has lived so long, after a certain point it becomes apparent that in litigation the same issues arise again, and again, albeit that they may have different labels, different contexts and arise in different circumstances. Thus on the current tide, housing disrepair litigation is flowing strongly again, with a variety of public authorities and social landlords, facing huge volumes of cases, with consequent claims for costs.

The reasons for this upsurge in litigation, in housing cases are not hard to discern. The first is the point in the economic cycle that we have found ourselves in. Any economic metric that you care to study points to the conclusion that this country never really recovered from the financial crash of 2008. Real wages have barely moved, or if they have moved, have declined in value. Economic growth has been negligible. Public spending has been squeezed and squeezed again, with a concommittant failure to maintain the condition of the housing stock. As legal standards for the quality of housing provision have not changed, more and more homes fall into disrepair, with the potential for tenants to take action against their landlords.

Another reason lies within the legal marketplace: as personal injury claims have dropped in number, and the demands of personal injury practice with its capital intensive requirements to carry payroll and fund disbursements, have forced more and more firms out of the personal injury space, they have looked for other fields to conquer.

So widespread is this phenomenon, that firms I have long thought of as litigators of bulk road traffic accident claims or credit hire claims, are now firmly established in the housing conditions market. The attractiveness of the market is not hard to discern. These claims are not subject to fixed costs, and will not be subject to fixed costs for a number of years. They also, like road traffic accident claims tend to prove themselves: the photographs in such cases, frequently illustrate the squalor in which people, often in the lower reaches of society are forced to live.

In consequence, therefore not only are claims for housing disrepair surging, but so are the consequential claims for legal costs, and in particular landlords are casting around for arguments, to defeat the claims for costs, just as occurred more than 20 years ago. Two arguments in particular are prevalent at this time. The first is the question of defeating claims for costs, by securing allocation of the claim to the Small Claims track.

A Claimant may have a claim for specific performance where the value of the repairs exceeds £1000 along with a claim for damages, which would ordinarily be allocated to the Fast Track. But a common consequence of intimating a claim is that a Defendant will act to resolve the repairs before issue, and then seek to have the damages claim allocated to the Small Claims Track. The repairs may be effected speedily in an attempt to gain a tactical advantage as if the partially settled claim is allocated to the Small Claims Track, then absent an Order from the court, the very limited costs provisions on the Small Claims Track, applies both before and after allocation.

The Court of Appeal ruled years ago on how the court should approach the question of costs, when a claim for repairs is raised in the Letter of Claim, but a claim for specific performance falls away due to subsequent repairs being made in the case of Birmingham City Council v Lee [2008] EWCA Civ 891 [2009] 2 Costs LR 191 which posed this question at paragraph 30:

Accordingly, it seems to us that we should approach this case without any pre-conceptions about the available methods of funding of cases such as these. The question is, as it seems to us, whether in order to make the rules and the protocol operate in the manner which must be intended, some order for pre-allocation costs is necessary, and if so, what.

The Court of Appeal resolved this question in the following way:

33. In our view, the answer to the question posed at para 30 is clear. Since the promulgation of the protocol it is no longer the case that a claim is only made (for costs purposes at least) when and if litigation is begun. On the contrary, the protocol requires a claim to be advanced initially in accordance with its terms, under a warning that there is likely to be a costs penalty if it is not. The references to costs which are contained in the protocol, and which we have set out at para 15 above, clearly demonstrate that the object of the protocol is to achieve settlement of disrepair claims without recourse to litigation. Its object is very clearly that, provided the claim was justified, it ought to be settled on terms which include the payment of the tenant’s reasonable costs: and costs calculated according to the track which the claim would fall to if made by way of litigation. We are unable to read the combination of para 3.7 and Guidance Note 4.10 in any other way.

34. Without some order as to the early-incurred costs, it would be open to a landlord who is in fact and in law liable for want of repairs to adopt a deliberate policy of omitting to repair until the protocol letter is received, but then of repairing without admission of liability so as to ensure that any subsequent court claim fell to the small claims track. The result of that would be that fast track costs which would otherwise have been due to the tenant would no longer be payable. We do not say that this is what has happened here; it may well not be. But that very possible scenario illustrates the necessity for some order in relation to the costs of advancing the protocol claim. Moreover, quite independently of the possibility of any such deliberate manipulation of the process by a landlord, such an order is necessary if the protocol is not to operate as a means of preventing recovery of reasonably incurred costs. The tenant who has a justifiable claim for disrepair needs legal assistance in advancing it. He must initiate it in accordance with the protocol. If the effect of the claim is to get the work done. then providing that the landlord was liable for the disrepair the tenant ought to recover the reasonable costs of achieving that result.

Although in the intervening years, both the Protocol and the Rules, have been redrafted, and renumbered, the principles have not changed.

The second argument is seeking to stay a claim, and divert a claimant down the route of ADR. Not mediation or arbitration of early neutral evaluation or even negotiation, but down the particular route of an internal complaints process. In such a process, the claimant will have the otherwise progression of their claim to trial diverted and delayed, repairs can be effected, and the claim, if there is a claim left, allocated to and tried on the small claims track. The question as to whether such a process is reasonable, or rather whether a claimant’s refusal to engage in such a process is reasonable, is the key issue left hanging by the recent decision of the Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416

70. In these circumstances, resolving issues 1-3 deals with everything that has been properly raised before the court. The question of what should happen now is more complicated. The difficulty is that Mr Churchill’s criticisms of the internal complaints procedure carry the implication that he was not unreasonable to refuse to engage in it, when the court has found that he was, and he has not appealed that finding. Had he challenged the finding, it would have been open to us to reach the opposite conclusion on the question of reasonableness, and the arguments before the court would have been different.

71. With those points in mind, I will say briefly what I think about issue 4. First, it is plain that, had the judge not concluded that he was bound by Halsey to refuse a stay, he would have granted one; as I have said, the basis on which he would have done so is not appealed. Secondly, in fact, things have now moved on considerably. Mr Churchill has refused to allow the Council to treat the knotweed in his garden, standing on his right to seek compensation and costs from the court. Thirdly, whilst the stay was sought after the issue of legal proceedings, the Council’s internal complaints procedure is plainly intended to operate before proceedings have been issued. We are told that it is in a form thatis in widespread use by Councils. Fourthly, the procedure itself seems, predominantly at least, to envisage a complaint about the Council’s services to council tax payers as opposed to private law claims against the Council as a neighbour. Finally, whilst the Council submits that its internal complaints procedure is crucial, because the total value of all knotweed claims brought by adjoining owners against the Council is very high indeed, it may not be the most appropriate process for an entrenched dispute of this kind.

72. In these circumstances, whilst it is obvious that the judge would have stayed the claim back in May 2022, had he been able to see this judgment, things have moved on. There is little point in doing so now, since nothing will be gained if a one-month stay were granted as the Council seeks. This court cannot properly grant a mandatory injunction against Mr Churchill requiring him to allow the Council to treat his knotweed. That has been neither formally sought nor argued.

73. It is better in my judgment to allow the appeal to the extent already stated and to allow the merits and demerits of this particular internal complaints procedure to be resolved on another occasion.

So although two decades have passed since the litigation in Bowen,and the economic cycle has turned again, the same interests are fighting the same issues, albeit with different tools, in a war that will seemingly never end, until everyone in this country has a decent and safe home to live in. What would it take to achieve that?

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