Jalili v Bury Council. Manchester County Court 17 June 2021 (copy of judgment can be found on Civil Litigation Brief here)
An interesting, though non-binding, county court decision on the issue of costs of a disrepair claim that settled pre-allocation.
Ms Jalili had begun a disrepair claim against her landlord, Bury. There was a joint report by her expert and the council’s expert. The claimant’s expert set out a list of works and costed it at open market rates at £3,915. The council’s expert set out a lesser list of works, costed at £740 on an ‘in house’ basis.
The council carried out the lesser list of works. The claimant, apparently accepting that adequate works had been done, offered to settle for £1500. The council counter-offered £1000 in damages and this was accepted by the clamant. That left costs. These were not agreed and went to an assessment hearing by part 8 claim, as the claim had not been issued. As there was no issued claim, there had been no allocation to track. The Housing Conditions Pre-action Protocol states at para 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 question was what were reasonable costs. Bury argued that claim would have been allocated to the small claims track, and so the small claims costs regime applied.
District Judge Hailsey referred to CPR 26.6(1) on allocation to track:
“The small claims track is the normal track for:
(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.”
As per the Court of Appeal, this meant
“The effect of that: providing there is a claim for specific performance, a tenant’s claim in a disrepair case will be a fast track case if either the cost of repairs or the consequential damages claim exceeds £1,000.”
The claim for specific performance was for Bury Council to carry out the works. That must therefore be the relevant cost of works, not the ‘open market rate’ given by the clamant’s expert. The claimant had apparently accepted that the more limited works carried out by Bury were in the event sufficient to remedy the disrepair, as a claim for specific performance had not been pursued further.
Therefore on the cost of works, the claim would have been allocated to the small claims track
It seems to me, therefore, that the cost of the repairs to the relevant premises was not more than £1,000. In fact, it seems to me, on the balance of probabilities, it was significantly less, and on that basis, on issue 1, were the court looking at the question of to which track this claim would have been allocated by reference solely to the value of repairs, it would have been allocated to the small claims track, and so again for the purposes of issue 1 the court would restrict, applying the overriding objective, the costs payable to costs that would have been allowed on the small claims track, which is the track to which the claim would have been allocated if allocation had taken place for the purposes of 46.13(3).
And small claims means effectively no costs.
Comment
While the logic is clear, there are questions and issues…
Why wasn’t there a single joint expert, as per the protocol? Particularly on what would clearly have been a low value claim from the outset. There is also the question of the additional works identified by the claimant’s expert. If strongly founded, those should have been pursued. If not strongly founded, there is a question of the merits of the expert.
Was there any evidence sought on the actual cost to Bury of the works? It appears not – but I would anticipate that might be a a battleground if this issue becomes widespread (which it probably won’t as low value/small works claims are inherently risky by reason of allocation to small claims).
Why would anyone settle for £1000 damages ever again (if costs of works are low) – expect claimant counteroffers of £1001…
“Why wasn’t there a single joint expert, as per the protocol?”
Presumably because the Defendant has previous experience of Claimant-nominated SJE’s placing an inflated valuation on the work – often with the intent of getting around the Small Claims Track limits.
“There is also the question of the additional works identified by the claimant’s expert.”
This might have been the Claimant’s expert finding all sorts of additional work which the Defendant might not have been liable for (no notice, tenant-caused damage, unnecessary/unreasonable works of improvement and not repairs); defendants are by now well-used to seeing such things added into the Claimant’s report – often with the intent of getting around the Small Claims Track limits.
“Was there any evidence sought on the actual cost to Bury of the works? It appears not – but I would anticipate that might be a a battleground if this issue becomes widespread (which it probably won’t as low value/small works claims are inherently risky by reason of allocation to small claims).”
It’s usually the Claimant’s expert who struggles to give any proper evidence as to what the works would cost on the open market; a defendant is usually in a position to give very detailed, credible evidence on the point – as social landlords have whole teams/departments dedicated to working out the correct cost of repairs, because those costs form a cornerstone of the business’s annual budget (which itself is subject to all sorts of oversight and scrutiny).
On SJEs – that is a very bad faith approach to take. If D objects to the proposed SJE, they can say so, with reasons and propose another SJE. That is in accordance with the protocol. Simply saying ‘it is party experts or nothing’ is against both the spirit and letter of the protocol and inevitably drives up costs, which is what you are complaining about.
On the rest, a lot of ‘might be’ supposition going on – but note my point on pursuing the additional works.
On the cost of works – you miss my point. It would have to be evidence of actual cost of works, not the defendant’s theoretical costings. But the point here wasn’t ‘open market’ costs – it was precisely the ‘in house’ costs that were found to be the suitable basis for assessing cost of works.
I am aware of a few authorities not instructing SJEs. My guess (and that is all it is) is that the reluctance to instruct an SJE stems from both (1) the upfront cost (cheaper to use an in-house salaried employee) and (2) not having a relationship with experts they trust who they can propose to the tenant’s solicitors as an alternative (it therefore being more work to propose someone else). Outside of London, the use of two experts appears (in my limited experience it has to be said) to be tolerated by some county courts despite it being contrary to the protocol.
In days gone by it would be a false economy (because most claims would be settled or fought, meaning it would be bonkers to have two experts). Now, I am told, the majority of these cases are CFAs that have been “farmed” and, apparently, a lot simply go away without being fought or settled. It may therefore save money in the long run (but still a very risky way to approach threatened litigation).
‘And small claims means effectively no costs.’ Not so; according to the judgement handed down by L.J.Arden in the case of Chaplair [2015] EWCA Civ 798
Those are contractual costs, forming part of the claim, not costs awarded under the small claims track. Completely irrelevant to a disrepair claim (whether by tenant or leaseholder).
See our note on John Romans Park Homes Ltd v Mr Hancock, Mrs Hancock (02 Dec 19, unreported).
https://nearlylegal.co.uk/2019/12/tribunal-costs-in-county-court-proceedings/