In response to LJ Jackson’s Report on Fixed Costs in Civil Litigation, HLPA has prepared a Statement
HLPAs response to Fixed Costs report (2)
A summary of this Statement is set out below:
HLPA would like to thank Lord Justice Jackson for the time taken to meet with members of HLPAs Executive Committee to address HLPAs concerns about the introduction of fixed costs in housing cases, and for the time taken by both Lord Justice Jackson and his assessors to consider the information and data supplied by HLPA.
Due to the complexity of housing cases and the vital importance of these cases to tenants, many of whom are extremely vulnerable, HLPA does not consider that fixed costs are appropriate for housing cases.
If HLPAs position on this is not accepted and Lord Justice Jackson’s recommendation to implement fixed costs for housing cases are to be implemented, HLPA submits that the following issues need to be considered in deciding how fixed costs should be implemented in housing cases.
Lack of Data in respect of Housing Cases
HLPA is concerned about the lack of data available to Lord Justice Jackson and his assessors in producing their report. HLPA welcomes the recognition in the Report of the complexity of housing disrepair and possession cases and agrees that, if fixed costs are introduced in these cases at the levels proposed, they should be allocated to Band 3 and Band 4.
HLPA has limited resources available to be able to obtain data in respect of the cost of cases. Further, since the reduction in scope of legal aid, the number of housing providers has reduced, and the number of housing providers undertaking disrepair cases has, in particular, reduced considerably. Therefore, the number of firms available to provide such data has reduced.
None of the costs budgets reviewed by Lord Justice Jackson or his assessors related to housing cases.
HLPA notes that the panel of assessors contained no housing lawyers. Whilst there were some judges on the panel, the majority of disrepair cases do not proceed to trial. Therefore, those judges will have only seen a small percentage of the overall number of disrepair claims. Further, the judges did not sit in London courts; the shortage of accommodation and high cost of accommodation in London makes the housing market in London unique. HLPA does not therefore think that any of the assessors had sufficient expertise in housing law to be able to fully assess these cases.
In respect of the proposed allocation of costs at each stage of a case, the levels of costs at each stage do not necessarily correlate with reasonable and proportionate levels of costs incurred at those stages in respect of housing cases. HLPA is particularly concerned about the level of pre-issue costs being proposed. Currently, in some cases, tenants are able to settle proposed disrepair claims without the need to issue a claim. However, this usually involves obtaining and considering an expert report, consideration of detailed disclosure, consideration of quantum and negotiations over works, any necessary decant, compensation and costs. If fixed costs are introduced at their current level, HLPA is concerned that tenants will be discouraged from early settlement, as they will be unable to recover their reasonable costs if the case settles pre-issue.
Complexity and Importance of Housing Disrepair Cases
The Report recognises that clinical negligence claims are often of low financial value, but of huge concern to the individuals on both sides. The Report recommends that a working party forming both claimant and defendant representatives be set up to develop a bespoke process for handling clinical negligence claims up to £25,000.
HLPA submits that housing cases are also often of low financial value, but of huge concern to both landlords and tenants. Housing disrepair claims concern the safety of tenants in their homes. Housing possession claims concern the very roof over a tenant’s head. The importance of these cases cannot be underestimated.
These cases are also highly complex. Housing possession cases often involve complex defences, including technical defences relating to validity of notices served, and substantive defences such as Equality Act, public law or Human Rights Act arguments.
Housing disrepair claims are usually fully defended and so require a tenant to prove liability for the defects, notice of the defects and inconvenience caused. There are no guideline rates of compensation and so housing lawyers are required to analyse comparable case law and assess liability for each defect to determine the appropriate level of compensation.
HLPA submits that a bespoke scheme for housing disrepair and possession cases would be appropriate.
The recommendations are that tracked housing disrepair and possession claims should be allocated to Band 3 of the proposed fixed costs regime. Particularly complex housing disrepair cases should be allocated to Band 4. HLPA recommends that if these proposals are implemented, a clearer distinction as to when cases are to be considered ‘particularly complex’ needs to be made. In light of the contentious nature of many housing cases, HLPA considers that landlords and tenants are unlikely to reach agreement on this without further guidance.
HLPA suggests that any cases where the cost of repairs is £5,000 or more should automatically be considered particularly complex and allocated to Band 4.
Impact of the Legal Aid, Sentencing and Punishment of Offenders Act
The Report highlights the importance of a co-ordinated approach and that any reforms must fit with other civil justice initiatives which are under way.
One such initiative is the government’s review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”).
LASPO had multiple effects on housing practitioners, affecting them disproportionately in the running of housing disrepair claims. Firstly, legal aid was removed from scope save for cases which present a serious risk to health, and even then legal aid is not available for the associated compensation claim. Legal aid ends when the ‘serious risk’ is removed, even where repairs have not been completed. This means that legal aid is not appropriate for the vast majority of housing disrepair claims post-LASPO and most need to be run under a Conditional Fee Agreement (CFA). Secondly, tenants were prevented from recovering success fees from their opponents post-LASPO, meaning that housing practitioners can only recover small success fees from tenants’ damages. Practitioners are therefore highly reliant on their ability to recover their costs at a reasonable hourly rate.
Since the introduction of LASPO, the number of housing providers has reduced significantly. There are ‘advice deserts’ in many areas of the country, with many vulnerable tenants unable to find a housing lawyer to represent them when they face eviction or have issues of disrepair with their properties.
The full impact of LASPO has not yet been assessed. HLPA is extremely concerned about further changes that could affect the viability of housing lawyers, and therefore access to justice. HLPA submits that the review of LASPO should be concluded with any recommendations fully considered before any further changes are implemented that could affect housing providers.
The value of non-monetary relief
HLPA agrees with the recommendation that if fixed costs are introduced a monetary value must be assigned to non-monetary relief.
HLPA considers that the value of £10,000 for an injunction is reasonable. HLPA is, however, concerned by the suggestion that the court could vary that figure downwards, if the courts could, as per the example provided in the report (at Chapter 5, section 5.4), assign a value with reference to the cost of works.
The cost of works in housing disrepair cases is often fairly low. However, the value to the tenant in getting works of repair completed, leaving them with a disrepair-free home for many years to come, is worth significantly more to the tenant than the cost of those works.
HLPA submits that the figure of £10,000 should be a minimum, with the courts having the power to vary from that figure only in exceptional circumstances, and only upwards.
HLPA is concerned that no recommendation has been made as to how to value possession claims. The value to the tenant in preserving their tenancy and keeping a roof over their heads, is obviously very high. HLPA submits that before fixed costs can be introduced in this area, further consideration as to how to value these claims should be given. If the value assigned to such cases were set too low, HLPA is concerned that this could breach tenants’ rights pursuant to Article 8 ECHR. The value to be assigned to these claims could be considered if a bespoke scheme was developed.
HLPA notes that the proposed new Intermediate Track recommends procedural changes to streamline cases. HLPA submits that if fixed costs are to be introduced in the Fast Track, that similar procedural changes should be considered.
Further, it is HLPA members’ experience that landlords often fail to comply with the pre-action protocol in housing disrepair cases. Specific reference to the costs consequences of failure to comply with the protocol should be made in the protocol and the court should have the power to disapply fixed costs where a landlord fails to engage with the protocol.
HLPA supports the idea of an uplift in costs for ‘beating’ a Part 36 offer. However, in respect of disrepair claims, HLPA notes that the majority of cases settle before trial and so Part 36 is rarely considered.
HLPA submits that an uplift for a failure to comply with the pre-action protocol or failure to engage in settlement negotiations would be appropriate, for example, where a tenant makes an offer early in proceedings but a landlord fails to enter into negotiations until trial is approaching.
The Report recognises that some highly complex housing cases should be allocated to the multi-track and, accordingly, not affected by fixed costs.
It is HLPA members’ experience that many higher-value disrepair cases and complex housing disrepair cases, where the trial is likely to last longer than one day, are still allocated to the Fast Track.
Furthermore, unlawful eviction claims, which should be allocated to the multi-track, are often allocated to the Fast Track.
If fixed costs are introduced, guidance should be provided to the courts to ensure that cases are properly allocated. Otherwise, HLPA is concerned that complex cases could be inadvertently caught by the fixed costs regime.
HLPA supports the recommendation of a voluntary extension the Aarhus Rules to all claims for judicial review where legal aid is not available.
As noted above, HLPA considers that housing cases are not suitable for a fixed costs regime. However, if fixed costs are to be introduced, HLPA considers that a bespoke scheme for housing disrepair and possession claims should be developed.
HLPA considers that further consideration is required to determine the ‘value’ of non-monetary claims, in particular as no recommendations have been made in respect of the value of possession claims.
HLPA submits that guidance should be provided to courts to ensure that cases are correctly allocated and consideration should be given to procedural changes to ensure that claims that are subject to fixed costs can be run as cost-effectively as possible. Failure to engage in pre-action protocols or in settlement negotiations should lead to costs consequences.
In any event, HLPA submits that no steps to introduce fixed costs in any housing cases should be commenced before the impact of LASPO has been reviewed.