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Birmingham City Council v Avril Lee­ [2008] EWCA Civ 891

Summary

In this case, Birmingham City Council received the notification of the disrepair and immediately took to undertake repairs. This created a problem for Claimant legal representatives in that it left them in a position where the only outstanding claim would be for damages. If the damages sought did not exceed £5,000.00 to be allocated to the fast track, then the matter would be allocated to the small claims track which means no costs would be recoverable.

Indeed, this was the position taken by Birmingham City Council and did not pay the claimant’s Solicitors costs who sought costs pre issue on a reasonable basis.

This was the issue which was being considered by the Court of Appeal.

Allocation

The normal rule is if the value of the claim is not more than £5,000.00 then the allocation is to the small claims per CPR 26.6(3)

Fast track is for claims which are not small claims, and the value of the claim does not exceed £15,000.00 per CPR 26.6(4)

For housing disrepair claims the rules re cost and allocation are contained in CPR 26.6(1)(b)

CPR 26.6(1)(b)(ii)

In disrepair claims, where the tenant is asking for repairs to a property and the value of that repair is not more than £1,000.00 and the value of any other claim is not more than £1,000.00, then the matter will be allocated to the small claims track.

What this means is where there is claim for disrepair and specific performance and either the value of the disrepair exceeds £1,000.00 or that the consequential damage exceeds £1,000.00 then the allocation will be to the fast track

If there is no specific performance, then the normal rule applies, and the matter will only be allocated to the fast track if the value of the claim exceeds £5,000.00.

However the problem with housing disrepair claims is that the pre action protocols allows for recovery of costs in a successful claim on the basis of reasonable costs under paragraph 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. “

At paragraph 30 of Birmingham the issue of costs and what this had to be was considered as follows:-

…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 question being considered is whether costs should be made pre allocation and if this is necessary, what should those costs be. The answer to that question was provided later at paragraph 33 as follows:-

In our view, the answer to the question posed at paragraph 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…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 paragraph 3.7 and Guidance Note 4.10 in any other way.

So what does this mean?

Previously a claim for costs included litigation, however, because the Pre Action Protocol for Housing Conditions Claims (England) includes a warning of costs, then the cost are incurred from being sent an Early Notification Letter or a Letter of Claim, however, costs are only recoverable on the basis that the claim is successful and those costs are reasonable costs

The important aspect to take from Paragraph 33 above, is that the purpose of the protocol is to settle the claim without recourse to litigation, on terms as if the matter had been litigated and allocated, as provided: –

“…costs calculated according to the track which the claim would fall to if made by way of litigation…”

Razah Kazmi
Housing Disrepair Team
Din Solicitors