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Proposals could end huge disrepair claim costs

4 August 2017 • Claire Hogan-Clark

Changes in legislation could bring an end to the extortionate fees sought by disrepair claimants’ solicitors, writes Claire Hogan-Clark.

Whilst fending off disrepair ‘claim farming’ culprits is an almost daily occurrence, many can no doubt also relate to the short-lived feeling of success when settlement on a disrepair claim is reached. Because next comes the frustration and disbelief when the Claimant’s bill of costs arrives in the post, often seeking extortionate fees for the work by their solicitors.

Claimants’ excessive legal costs

More often than not it is not the cost of the repair works required nor the amount of general and special damages sought that are above and beyond what is expected; it is the excessive legal costs claimed by the Claimant’s solicitors that usually attempt to double the total cost of damages and repair works put together.

Costs are incurred following the protocol steps, with a potential costs penalty for not doing so. Since Birmingham City Council v Lee [2008] EWCA Civ 891 - which is the main case concerning Claimants costs in housing disrepair cases - if a claim is justified, it ought to be settled on terms which included the payment of the tenant’s reasonable costs, and these costs were to be calculated according to the track which the claim would fall to if made by way of litigation. Unfortunately, the interpretation of this has led to an unfortunate imbalance.

Costs review

In an effort to remedy the disparity that exists Lord Justice Jackson has made a number of recommendations since commencing a Review of Civil Litigation Costs. As part of this review Lord Jackson has recommended that the costs in housing disrepair cases should be fixed to fast track claims, or claims between £25,000-£100,000. (Click here for the full report.)

Lord Jackson’s proposals would extend Fixed Recoverable Costs (also known as FRC which usually apply to personal injury claims) to non-personal injury claims of which there are four categories, the most relevant being Band 3 and Band 4.

  • Band 1: RTA non personal injury, defended debt cases
  • Band 2: RTA personal injury (within Protocol), holiday sickness claims.
  • Band 3: RTA Personal injury (outside Protocol), EL, PL, tracked possession claims, housing disrepair, other money claims.
  • Band 4: ELD claims (other than NIHL), any particuarly complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the fast track.

Pursuant to CPR 44.9 (2), The Court has the power to make a costs order pre allocation period, unrestrained by the limitations of whatever the claim is allocated to. Any FRC will be based upon the stage of settlement and will be calculated as a fixed fee and a percentage of damages.

In circumstances in which non-monetary relief is sought, such as an injunction compelling the Defendant to carry out repairs (specific performance), then Lord Jackson’s proposals would require the courts to allocate a value to the relief sought. The Court would have the power to increase or decrease this where necessary. In most cases the repairs will have been allocated a value i.e. £5000, the injunction requiring those works should be treated as if it were an award of £5000.

Close the flood gates

Whilst positive changes may be on the horizon for Registered Providers, Lord Justice Jackson’s proposals will be subject to further consultation before any implementation. Clearly, from the information available, if these reforms are introduced it will be excellent news for social housing providers as these proposals are highly likely to close the flood gates to housing disrepair claims.

In the meantime its business as usual for the claim farmers who continue to generate disproportionate fees to the damages, much to the frustration of RPs.

Disrepair: don’t despair

If you would like any advice on disrepair our Housing Management team are experts getting results and reducing costs. Please get in touch with Melanie Dirom on / 0161 827 7178.

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