One of the consequences of growing older, is that you realise that all time is circular, and you return to moment after moment that you thought past and gone. Thus I have been fighting the costs wars that swing round consequent to a surge in the number of housing disrepair claims, for more than 20 years now. In those years there have been many battles: the enforceability of conditional fee agreements, retainers tainted by the unlawful practice of door knocking, standardised time recording, misconduct and mis-certification of bills amongst others.
At the current time, there are a number of issues that are arising with great regularity, as the local authorities continue to fight to defeat claims for costs. One of these is the use of internal local authority complaints processes as a form of ADR: prompting applications and appeals to stay county court claims, pending this process grinding to a conclusion. Related to this are the growing numbers of orders made, sometimes of the court’s own initiative for mediation and the consequences for the claim that stays on the litigation process may have. But in my view, the most significant issue for costs purposes, at the current time is that of allocation of claims.
There are in various county courts, a significant number of claims, which are allocated to the Small Claims track, when on the face of things, it would appear that the claims belong on the Fast Track. In particular, if there is a claim for housing disrepair where an order for specific performance is sought, where the value of the repairs or other works that are required, is more than £1000, or there is a claim for damages arising from the lack of repair, of more than £1000, how much scope does a district judge have at an allocation hearing, to apply a broad discretion to allocate the claim to the Small Claims Track?
The starting point for all decisions on allocation, is for the court to determine what is the “normal track” for a particular case. The normal track for a claim for damages which has a value of not more than £10,000 is the Small Claims track, per CPR 26.9(4). But this is subject to several exceptions contained in CPR 26.9(1).
Where there is a claim for specific performance by a tenant of residential premises a different set of criteria apply per CPR 26.9(1)(b):
(b)any claim which includes a claim by a tenant of residential premises against a landlord where—
(i)the tenant is seeking an order requiring the landlord to carry out repairs or other work to the premises (whether or not the tenant is also seeking some other remedy);
(ii)the cost of the repairs or other work to the premises is estimated to be not more than £1,000; and
(iii)the value of any other claim for damages is not more than £1,000;
The intention of Parliament by deliberately providing very low figures, is that in all but truly trivial cases, the “normal track” for a housing conditions claim will be a costs bearing track. This was deliberate: at the time the decision was made to raise the Small Claim Track limit generally, Parliament removed Legal Aid from claims for housing disrepair. These claims were to be funded by solicitors on conditional fee agreements, recovering their costs in winning cases from losing defendants.
Thus, where there is a claim for specific performance, only if both the repairs and the damages are for sums less than £1000, will the Small Claims track be the normal track. This has the consequence that all but the truly trivial claims, will be allocated to a costs bearing track. The normal track is usually going to be the Fast Track.
CPR 26.12 provides as follows:
(1) In considering whether to allocate a claim to the normal track for that claim under rules 26.9, 26.10 or 26.11, the court shall have regard to the matters mentioned in rule 26.13(1).
CPR 26.13 provide as follows:
(1) When deciding the track for a claim, the matters to which the court shall have regard include—
(a)the financial value, if any, of the claim;
(b)the nature of the remedy sought;
(c)the likely complexity of the facts, law or evidence;
(d)the number of parties or likely parties;
(e)the value of any counterclaim or additional claim and the complexity of any matters relating to it;
(f)the amount of oral evidence which may be required;
(g)the importance of the claim to persons who are not parties to the proceedings;
(h)the views expressed by the parties; and
(i)the circumstances of the parties.
The nature of the remedy sought (specific performance) and the circumstances of the parties will include it is submitted, taking into account the context of the claim, which is one made for housing conditions or disrepair: that a claimant is a tenant and the defendant is her landlord, and that for a case of this nature, both parties are expected to comply with the Pre-Action Protocol on Housing Conditions.
The Pre-Action Protocol is an updated version of the earlier Pre-Action Protocol on Housing Disrepair but the substance of the Protocol remains the same and still contains the following provision renumbered from the former Protocol:
11 If the tenant’s claim is settled without litigation on terms which justify bringing it, the landlord will pay the tenant’s reasonable costs. The Statement of Costs Form N260 can be used to inform the landlord of the costs of the claim. https://www.gov.uk/government/publications/form-n260-statement-of-costs-summary-assessment
(emphasis added)
The working of the Protocol was extensively considered in the case of Birmingham City Council v Lee [2008] EWCA Civ 891 where the Court of Appeal observed:
24. The issue of principle in this second appeal relates to costs in a housing disrepair case. There is a pre-action protocol applicable under the CPR to such cases. It requires the tenant to give early notification to the landlord that a claim is being made, rather than commence immediate proceedings. The question which we have to consider arises where, on receipt of that notification, the landlord promptly carries out the repairs. If he does, that will remove from the tenant’s claim in the court action subsequently brought any application for specific performance of the repairing covenant, but will, very often, leave outstanding in that action only a claim for consequential damages. It may often be the case that if the landlord had not carried out the repairs, and thus the tenant had sued for specific performance as well as for consequential damages, the effect of the CPR (“CPR”) would have been that the action was allocated to the fast track. By contrast, if the action is for the consequential damages alone, because the repairs have now been done, the action will very often fall to be allocated to the small claims track. The issue for us is this: what if any order ought to be made in such a case as to pre-allocation costs? In particular, ought some order to be made which reflects the fact that until the repairs were carried out the tenant’s claim (notified under the protocol) was for specific performance as well as for damages, and would potentially have been for allocation to the fast track ?
The effect of the Protocol, and a claim for specific performance was considered by the Court of Appeal in these terms:
26. It is quite clear from those warnings and other provisions that the protocol is structured in such a way as (a) to put a claimant at risk of an adverse costs order if he ignores the protocol and commences his action straight away, and (b) to assume that if he does not ignore it, but, rather, operates it correctly by giving early notification of his impending claim without starting an action, his reasonable costs will be met, providing his claim is justified, according to whether the claim would fall within the fast track or the small claims track if it were to be made in court. However, although that is the clear structure of the protocol, it proceeds upon the assumption (or hope) that the parties will settle if there is an early exchange of claim and response and that that settlement will include the claimant’s reasonable costs if his claim was justified. Whilst that may be the assumption, or hope, the protocol has itself no coercive power as to costs, and if there is no legal action, there is no court to compel payment of the costs which are anticipated by paragraph 3.7.
(emphasis added)
The guidance of the Court of Appeal is clear: the existence of the Protocol, means that a tenant who complies with it, who has a qualifying claim for specific performance for which the Fast Track would be the normal allocation, should have the potential to recover her costs. What this points to is that the discretion of a district judge is not broad, but narrow. Once a claim for specific performance is made, the case of Lee points to the court being practically compelled as a point of principle to allocate a claim above the £1000 limits to the Fast Track.
Conversely, a case which is allocated to the Small Claims track, should be one which in round terms is worth less than £1000 in respect of the costs of the repairs and the value of any damages claimed. This conclusion does not affront the overriding objective, but rather runs with the grain of it, providing a neat means of ensuring that the requirement of proportionality is met, and reflecting the fact that except in the instance of truly trivial cases, the rules contemplate that for housing disrepair cases, a winning claimant will as part of a “normal” allocation, recover her costs.
I have noticed this phenomenon with credit hire claims, where the £10,000 normal track limit, seems to be increasingly honoured in the breach rather than the observance. But credit hire famously, as the unwanted child of the county court lacks its own Protocol, which might offer some direction on allocation and costs consequences. Returning to the field of housing disrepair, there is no sign of the allocation battles, as part of the wider costs wars, subsiding yet and they continue to provide a steady flow of appellate work to the Circuit Bench.