13/09/2007

Quantum in Disrepair

point at the problemI’ve been meaning to post on this for a while and have been prodded into life by quite a few searchers on the topic. The reason I’ve been delaying is that, frankly, it is a bit of a sod. Unlike the carefully calculated, quantified, actuarialised and tabulated scales of Personal Injury claims, disrepair quantum is at best foggy, at worst an aporia.

There are reasons for this, mostly the lack of cases taken to trial, and with it lack of detailed ‘authorised by the higher courts’ means of assessment. It is also because the heads of damages aren’t as clear, being allegedly contractual but with a vague importation of tort.

This is my attempt to summarise the current situation, with a suggestion of where matters might move and why they are unlikely to.

From 1998, the main case has been Wallace v Manchester 30 HLR 1111 (also as [1998] EWCA Civ 1166). Wallace said firmly that the base of quantum is contractual, not tort, the principle being the restitution of the difference in value between the property with disrepair and the property if the landlord had fulfilled the repairing obligation. Discomfort and inconvenience for the tenant are a part of this head, not a separate, tortious, head of damages.

But how to assess this? Wallace was wonderfully vague. Either a Global Award – an assessment of damages as a whole – or a Nominal Reduction approach – an award for reduction in rental value – or both as one. But Wallace did suggest that a global approach should be cross checked against a nominal approach.

However, Wallace did unofficially set up a tariff of an award of between £1,000 and £2,750 per year as a scale for disrepair. Updated for inflation, that is now £1264 to £3477 per year of disrepair, depending on the seriousness of disrepair.

proverbial mould[Now, before any non-housing lawyers and tenants reading this start getting their calculators out to work out what their compensation payout will be, it isn’t that straightforward. This is assuming that there are no liability issues, no issues about notice or access, the tenant has excellent records and, for reasons explained below, no settlement offers are made. It is safe to say that this never happens. This is a tool for considering a range of likely compensation, no more. Settlements therefore tend to be lower than the tariff figures suggest, read on for other reasons why.]

Oddly, this tariff has become the norm. Most settlements work on some form of the Wallace scale. I say oddly because the Nominal Reduction approach, based on rent payable, could, even at the time of Wallace, produce higher awards.

More recently, Niazi Services Ltd v Van der Loo [2004] EWCA Civ 53, and English Churches v Shine [2004] EWCA Civ 434 have gone some way to affirming a Nominal Reduction approach, based on a proportion of rent. While this means that the maximum award is limited by the rent ( and that higher rental property will attract a much higher award for relatively small disrepair), given that even a low average social tenancy rent is worth £4000 per year, an assessment of damages is likely to be higher than the Wallace tariff (even adjusted for inflation. The Wallace tariff in that case amounted to a scale of something like 50% to 100% of rent, as far as I recall).

By the way, Earle v Charalambous [2006] EWCA Civ 1090 confirms the use of the nominal approach, but also gives leaseholders the route of a proportion of an assessed open market rental value as the base for the rent value. The argument rejected was that a nominal rent approach was not open to leaseholders claiming for disrepair.

Why haven’t calculation and negotiation of damages moved to a nominal rent model? This would be likely to raise damages on the whole, even if not by a very large amount in many cases.

The answer is not straightforward. But the main reason is risk and the Civil Procedure Rules (CPR).

Hardly any disrepair cases get to trial, as most get no further than a negotiation over settlement. But trial is the only place where the valuation approach will be tested and confirmed, also giving a useable precedent.

Why do the cases usually settle? For the non or student lawyer readership, the answer is risk resulting from the effects of Part 36 of the CPR. For instance, if a few weeks before a trial date (or indeed at any point before that), the landlord makes an offer of settlement that is reasonable but at the lowish end of the scale from your estimation of the claim, the calculation goes like this:

If the matter proceeds to trial, the extra legal costs from the point of the offer are likely to be c. £5000 (at an absolute minimum for both sides’ costs). If the claimant does not get a damages award at trial that is better than the offer, they will be liable for the legal costs of both sides from the closing date of the offer. So, if the offer is in the range that a court may award, there is a genuine risk that the claimant will end up liable for the £5000(+) costs. This will wipe out or severely dent any damages award actually made, because the costs will come out of the damages.

The same calculation pretty much applies for legally aided, private and ‘no win no fee’ (CFA) clients. So, the discrepancy between the offer and what the claimant’s solicitor (and barrister) think is the likely range of damages at trial has to be very large to go ahead. This takes a strong claimant’s case and a rather bad defendant – which rarely happens. Alternatively, it takes a private client who is happy to bear the risk and go on even after advice, which rarely happens. Neither legal aid funding nor a CFA will usually support the burden of risk.

The Part 36 offer rule was intended to make cases settle, and it works. But in disrepair, I’d suggest it is keeping disrepair damages artificially and unfairly low.

I would be delighted to hear any accounts of disrepair damages awards at trial from readers. I do have a couple of recent examples, but the circumstances are both utterly distinct and relevant to the award, so anonymity, alas, forbids. Suffice it to say that in both cases, the Court inclined to a nominal percentage of rent approach, rather than the Wallace ‘tariff’.

What counts as serious or less serious disrepair is a matter of fact, evidence and some common sense. But is also a topic for another post.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

13 Comments

  1. MarkP

    Interesting post.

    The link for Wallace on bailii if anyone is interested is:
    http://www.bailii.org/ew/cases/EWCA/Civ/1998/1166.html

    Does anyone know of a good book on disrepair? I’ve always used Jan Luba’s excellent ‘Repairs: Tenants Rights’ (Legal Action Group) but its now woefully out of date, having been published in 1999, prior to the Housing Act 2004 Act amendments.

    Reply
  2. cal

    off-topic thanks!
    I don’t do housing law (and to be honest have no interest in doing so) but my civil legal aid firm does – and so as trainee i ended up clerking a housing case recently where our Counsel succesfully used Shala . As i say, i don’t do housing myself, and won’t ever (if i have my way!)but having started to read the case history the night before found myself thinking “Shala, I’ve read a case called Shala. Shala, that’s exactly this point of law, i know what they are talking about, i know how i would argue this case, let me guess, the skeleton argument will be based on Shala” and lo and behold it was. And all because for some reason i’ve never quite figured out (given that I really don’t by any stretch of the imagination find housing law interesting!) i read your blog and you had explained it brilliantly. so very many thanks for helping this little trainee feel not so totally lost and out of depth as they otherwise would have been clerking a case about which they would have known abaolutely nothing.

    I still utterly fail to see the attraction of housing law however!

    all the best, and thanks again – keep blogging!

    Reply
  3. contact

    MarkP – Many thanks for the Wallace link, I’ve added it to the post.I don’t know of any more recent disrepair books, sorry. I agree that the LAG book could do with an update.

    Cal – I am of course happy if I have helped turn housing law from something vile and bewildering into being loathsome and comprehensible. And I think that I am glad that you continue to read the blog, even if you haven’t the faintest idea why (Could it be my charm, elegance and way with a bon mot? No? Oh.). But as one trainee to another, less of the ‘little’. Stand tall, be proud and go on to do Family work instead. Good to hear Shala is being used successfully, by the way.

    Reply
  4. cal

    lolol, it’s ok, we don’t touch family law with a barge pole either. here we take great delight in doing mental health, welfare benefits, public law, education, community care, immigration and asylum, complaints against the police, planning…..oh and some poor sods get to do housing! :) So plenty to keep me happily occupied.

    you’re right, it is indeed your eloquence and natural charm, and certainly not neighbour disputes, tenants rights or ASBIs that keep me here!
    xCal

    Reply
  5. bigugly

    “Aporia” Now there’s a word you don’t come across often. Not knowing what it meant, I looked it up. It remains a word I shan’t use often.

    Reply
  6. Slimboyfat

    Sorry a slight deviation regarding disrepair issues here, I do hope you all dont mind too much……But folks, it is that time of year again…. for the lowly disrepair lawyer (although the summer rain fall highlighted many dodgy roofs and business boomed) the nights draw in, the temperature drops and despite complaining time after time, many local authority tenants realise that they face yet another winter of misery due to the state of their home (landlord calls this a property, it’s far less personal)

    As a “very late to the law” convertee doing disrepair claims amongst other bits and bobs, I struggle to reconcile the attitude of these chaps and chappettes in local authorities (I hold rather unsavoury thoughts about making them live in these conditions with their young families that they so readily seek to defend as “no impact on tenant”. Lets see how they like it). They really do hold the view (as one LA surveyor stated to a client) “you are lucky to have a three bedroomed property”. I’m sorry I have some ever so slight issues here as I am sure many others will!

    What to do?……. As an add on we were discussing ticking that little box on the N1 Claim form about HRA 1998. Would it help to rely upon “convention” rights contained within? Is there any point trying?

    I throw open this question, as quite simply, whilst I may consider myself adequate at my job (certainly dedicated), there is no substitute for experience as they say! There are many well qualified Counsel and Lawyers out there who, I am sure will have some very useful directions upon this point that will assist me.

    Whilst I am also sure that Defendant Counsel and Lawyers will also subscribe to this excellent site, I would, non the less be pleased to receive any comments on the merit of ticking the box or otherwise. And, if there is merit, maybe it’s time to try to persuade the Courts that enough is enough.

    Putting on my layman’s head ” how can these *******s treat people like that?”

    Reply
  7. contact

    Certainly, there are no shortage of horror stories on Local Authorities’ failures to repair. But I’m not sure what you are thinking about in ticking the HRA box. What kind of breach and how would this go beyond the s.11 and contractual repairing liabilities?

    Reply
  8. slimboyfat

    We were thinking it could be another item to plead i.e art 8 & 14 for example. Right to respect,home etc, clearly the authority is interfering and art 14 is an interesting one to argue…”national or social origin” I know of housing officers who are quite happy to place these tenants in a catagory that is in their view reflecting the class of people they are supposed to serve. Without going into too much detail, I feel there would be little to lose anyway?

    I an sorry to not include as much detail as I could with this reply but I am rushing to produce some PoC’s as we speak…just deciding to tick the box or not!!

    Reply
  9. contact

    Ah OK, slimboyfat. I was wondering if you had a new take. You might want to have a look at Lee v. Leeds B.C.; Ratcliffe v. Sandwell B.C. [2002] EWCA Civ 06; [2002]H.L.R. 17, which effectively said that it was not necessary to re-interpret s.11 L&T in view of Art 8, insofar as tenants were not left without a remedy (either s.11/tenancy agreement or via EPA 1990 on nuisance). The CoA rejected the argument that the HRA imposed a separate duty on Local Authority Landlords. The only exception might be an extreme case that wasn’t addressable under s.11 and/or the EPA.

    Art 14 – arguably the same – could be done via a discrimination claim, so no need to have recourse to HRA and certainly needs evidence.

    Reply
  10. Slimboyfat

    Thanks for the comments, I will begin my research in earnest!

    If there are any new angles I shall of course look to share them…..In the meantime, I shall leave no stone unturned in my pursuit for justice!!!! (I may also find some housing officers under those same stones as well!!)

    Reply
  11. Samantha Calder

    Hi Giles
    I realise that this post was made quite a few years ago but I am currently in the process of taking my social housing landlord to court after living in bad disrepair for 2.5 years. My solicitor is currently trying to calculate the amount of damages that we should receive. If you are interested in my case I would like to discuss it with you and hear your views.
    Many thanks
    Sam

    Reply
    • Giles Peaker

      Sam

      I’m afraid we can’t give advice on individual cases via the blog. In any event, you already have a solicitor, so it would be inappropriate for me to comment unless formally instructed for a second opinion.

      Reply
  12. A Smith

    I have just read your blog while trying to research putting together a trial bundle. I will be going to trial, in the next 10 days, for a housing disrepair defence and counter claim which started as a possession case using section 8 which started towards the end of last year.

    I am LIP and I am terrified but really poor housing destroys lives. I believe, at times, I am more capable than most and feel obliged to keep going in the hope that I can go to the local press with a win and encourage others to stand up for their rights. But it is not easy! If I do not win and get considerable damages I will need to file for bankruptcy but there is merit in my case and I have been truthful against a claimant and his reckless direct access barrister who have both lied and so unbelievably I wonder what will come next.

    I can say much more than that but will let you know the outcome.

    Do the trials ever last more than half a day? I really hope my nightmare is about to end.

    Reply

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  2. Illegal Eviction and Disrepair damages | Nearly Legal - [...] of rent following English Churches v Shine and Earle v Charalambous, rather than the Wallace scale, as I have…

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