Background
The Claimant brought a claim for housing disrepair as the tenant of the local authority Defendant. The Defendant made three Part 36 offers during the underlying proceedings, all of which made specific references that “The Defendant will pay the Claimants reasonable legal costs, to be assessed if not agreed."
The Claimant accepted the Defendant’s final offer of £1,000 for general damages plus repairs. When accepting the Claimant went so far as to stipulate in correspondence:
"Thank you for clarifying in our phone call today that the offer you have made is for The defendant to pay the Claimants reasonable legal costs on a standard basis to be assessed if not agreed. I can confirm that my client has accepted your offer".
Consequently, the Claimant commenced assessment of their costs and the matter proceeded to a provisional assessment. The Defendant thereafter requested an oral review of the provisional assessment. This was originally requested on the basis that all assessed items would be subject to review, however prior to the hearing the parties focused on a single issue being whether the claim would have been allocated to the Small Claims Track had the parties not compromised their dispute before the issue of proceedings.
Small Claims Track
CPR 26.9(1)(b) provides that “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″
Defendant’s Position
The Defendant relied on CPR 46.13(3):
Where the court is assessing costs on the standard basis of a claim which concluded without being allocated to a track, it may restrict those costs to costs that would have been allowed on the track to which the claim would have been allocated if allocation had taken place.
The Defendant submitted that the repairs were valued at less than £1,000 and the settlement sum is the best indicator of value when considering the question of what track a claim would have been allocated to.
Claimant’s Position
As to CPR 46.13(3), the Claimant accepted that the Defendant was entitled to make their track allocation argument but reiterated that the agreed damages were not the only factor the court should take into account when considering this point.
Had the Claimant been required to issue proceedings she would have pleaded damages in excess of £1,000 and, without the outstanding specific performance element of the claim, the pleaded value would have been stated as £1,000 to £3,000 or £1,000 to £5,000.
The Claimant also observed that Part 36 does not apply in the Small Claims Track and so the Defendant's making of Part 36 offers which excluded any reference to the Small Claims Track was consistent with the rules.
Decision
In regards to the offers put forward by the Defendant the Judge noted:
“The fact that the Defendant made three Part 36 offers, and made specific references to costs to be assessed if not agreed each time, might reasonably lead one to conclude that the Defendant acknowledged the likelihood of this case being allocated to the Fast Track had it been issued. That is certainly the conclusion the Claimant drew.”
In response to the Defendant’s reliance upon CPR 46.13 the Judge outlined:
“CPR 46.13 is a rule which is specifically constructed to invite retrospective consideration. There is no reference to the settlement sum within the rule, and one observes that such a provision would likely have been included by the legislature were the settlement sum intended to be a definitive measure of retrospective allocation.”
The judge considered the Claimant's age and health issues, finding that the duration and severity of the disrepair (69 weeks) meant the claim would likely have been pleaded at more than £1,000.
“The terms ultimately accepted included an agreement to effect the repairs within 8 weeks, plus damages of £1,000. However, I am in no doubt that the facts and circumstances as at the date of acceptance were such that had proceedings instead been commenced, this claim would not have been allocated to the Small Claims Track on the basis that pursuant to CPR 26.9(1)(b)(iii) the Small Claims Track would not have been the normal track for a "claim which includes a claim by a tenant of residential premises against a landlord" where the value of the claim for damages would have reasonably been pleaded at more than £1,000 based on the circumstances presented at the time.”
Costs Judge Nagalingam therefore confirmed that the provisional assessment was final, and the Defendant was ordered pay the Claimant's costs of assessment, to now additionally include the costs of the oral review hearing.
Commentary
This claim is an important one for tenants and landlords alike, it correctly provides that Claimants should not be forced to issue proceedings so as to ensure security on costs and Defendants should not make offers on/below certain thresholds purely to attempt to circumvent paying costs on the standard basis.
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