CHAPTER TWO – PRE-ACTION PROTOCOL FOR HOUSING CLAIMS (ENGLAND) “PAP”
Housing disrepair claims often give rise to disputes about notice, disclosure, delay and scope of works. The PAP sets out how these claims should be conducted.
Aims of the Protocol
It is important to consider the PAP in the context of costs. After all, one of the aims of the protocol is to keep the costs of resolving disputes down (2.1(f)) which echoes the overriding objective.
Another aim of the protocol is to promote the speedy and appropriate carrying out of any remedial works which is the landlord’s responsibility (2.1(b)) which again echoes the overriding objective.
A landlord’s liability generally arises once they have received notice of the disrepair. Costs disputes frequently turn on whether notice had been given properly or at all. If the Landlord has not been given notice of the alleged items of disrepair, they will often take issue that a claim has been brought without giving them the opportunity to promptly undertake the necessary remedial works.
There can also be costs disputes arising from Landlords being refused access to carry out the necessary remedial works. This may be driven by costs, as once the remedial works are completed, it may push the claim into the small claims territory (as per Birmingham v Lee– see chapter 3). Section 7.6 of the PAP provides that:
Tenants must allow the landlord reasonable access for inspection and the carrying out of works in accordance with the tenancy agreement. The landlord should give reasonable notice of the need for access, except in the case of an emergency. The landlord must give access to common parts as appropriate, for example, for the inspection of a shared heating system. If the tenant is no longer in occupation of the premises, the landlord should take all reasonable steps to give access to the tenant for the purpose of an inspection.
The PAP also provides for the early exchange of information (2.1(d)). Tenants will often request a copy of the tenancy agreement the tenancy file; any documents relating to notice of poor housing conditions given, including copies of any notes of meetings and oral discussions; any inspection reports or documents relating to works required to the property; and any computerised records (as per 5.3 of the PAP).
Alternative Dispute Resolution (“ADR”)
ADR is featured in both the overriding objective and PAP.
Landlords often argue that proceedings have been issued prematurely, particularly in circumstances where they have not yet been able to inspect the property, have not yet received expert evidence, or negotiations are ongoing. By contrast, Tenants will often argue that proceedings have been issued due to a lack of progress by the Landlord.
Section 4.1 provides that:
The courts take the view that litigation should be a last resort, and that claims should not be issued while a settlement is still actively being explored. Parties should be aware that the court will take into account the extent of the parties’ compliance with this Protocol when making orders about who should pay costs.
Clearly the intention of this warning is to ensure that litigation truly is treated as a last resort and not as a strategy to exert pressure.
Section 4.2 then provides options for resolving the dispute. Mediation is rarely deployed pre-litigation. It is probably the case that mediation is not deemed cost effective for a low-value claim. Instead, Landlords will often encourage Tenant’s to pursue their complaints procedures. The issue with complaints procedures is, again, costs. Often it is the case that resolutions under complaints procedures will include specific performance and compensation, but rarely does it include costs. This causes conflict between the Claimant and their solicitors. On the one hand this resolution may be attractive to the Claimant, whose primary goal is for the repairs to be undertaken and to be appropriately compensated. However, the Claimant’s solicitor will want to ensure that they are able to recover their costs, often incurred pursuant to a CFA. If a settlement is achieved which does not provide for costs, then the Claimant’s solicitor will not be able to recover from the Defendant. Claimant solicitors are therefore in an undesirable position whereby their client’s best interests are served by pursuing the complaints procedure, but their own interests are not. It seems that this can be resolved by Claimant solicitors encouraging clients to pursue the Landlord’s complaints procedure before a claim is initiated. Such procedures are designed in such a way that a lay person can advance a complaint without legal representation. Indeed, Landlords are more likely to offer more attractive settlement terms if costs are removed from the equation. Importantly, for Landlords, is that they have an effective complaints procedure which encourages and facilitates resolution of potential claims.
Landlords should also be aware of section 6.4 of the PAP. If the Landlord fails to respond to the Letter of Claim within 20 days, or at all, this is a breach of the Protocol and the Tenant is then free to issue proceedings.
Timetable
| Step | When |
| Letter of Claim | Earliest possible opportunity (5.2) |
| Landlord’s Response | 20 working days of receipt (6.2) |
| Single Joint Expert or Joint Inspection | The property should be inspected within 20 working days of the Landlord’s Response (7.4) |
| Single Joint Expert Report or Schedule of Works in the event of a joint inspection | Within 10 working days of the inspection or joint inspection (7.4). |
| Take stock | Before issuing proceedings (8) |
If a Claimant has not engaged in ADR before issuing proceedings, then Defendants may apply for an appropriate stay.
In Rebecca Jones v Bristol City Council (7 August 2024 in Bristol County Court) District Judge Wales was considering the costs position when a claim was resolved under a complaints procedure. The Claimant sent a letter of claim on 22 February 2022. The Defendant initiated its Internal Complaints Procedure and alleged that the involvement of lawyers was inappropriate unless and until the complaint procedure had been exhausted. The Claimant proceeded to inspect the property and obtain expert evidence. On 18 April 2023 the Defendant completed its Stage 1 response to the complaint and, whilst denying liability, offered £475 in compensation. The Claimant issued proceedings on 30 March 2023. A defence was filed on 23 June 2023. By consent the claim was stayed for 3 months to enable ADR. On 2 November 2023 the Defendant issued its Stage 2 response under the ICP and offered compensation of £1,502. This was accepted on 10 November 2023. The position of the Claimant at the hearing was that the claim had come to an end by reason of the stage 2 payment by the Defendant to the Claimant, but that the question of costs remained unresolved. The Claimant therefore sought an order for costs up to the date the repairs were completed, relying upon the Court of Appeal judgment in Birmingham City Council v Lee [2008] EWCA Civ 891. The Defendant contended that the involvement of lawyers on behalf of the Claimant, sending a letter of claim, and then the issue of proceedings, was not justified in the circumstances of this case, where the matter was resolved by the Defendant’s responsive repairs team and the Defendant’s internal complaint procedure at stage 2. The Claimant claimed that the involvement of lawyers was justified, in that the Claimant had a fully formed cause of action in relation to the alleged disrepair at the time that the letter of claim was sent, and given the delays in progressing the first stage ICP, the issue of proceedings was justified, and that the second stage of the ICP was not completed in any event until November 2023, some 21 months following the letter of claim, and in any event the result of the ICP included an admission of and compensation for delay. The Court was therefore left to resolve the question of costs without having had the benefit of hearing the case and resolving the dispute of fact and law between the parties. The Court acknowledged the guidance of the Court of Appeal in BCT Software Solutions Ltd v Brewer & Sons Ltd [2003] EWCA Civ 939 which recognised the jurisdiction of the Court to do so. Where it was clear which party was the successful party upon a settlement, the Court may be more willing to determine outstanding issues of costs; however, the Court should be slow to embark upon on the determination of disputed facts solely in order to put the Court in a position to make a decision about costs. The Court should not depart from the normal order unless it is in a clear position to do so on a proper basis of agreed or determined facts which enable the Court to decide what order as to costs ought to be made. There was no presumption that where a dispute is determined without agreement as to costs then the default position was ‘no order as to costs’. The Court acknowledged that the protocol does not require the Claimant to attempt or exhaust ADR before issuing a letter of claim, but it did require the parties to consider whether ADR was more suitable than litigation. The Court considered the framework provided by Birmingham v Lee. The original complaint was credible and fell within the remit of the fast-track. The works had been completed by 1 June 2023. The proceedings, as issued, did not recognise the works that had been carried out by the Defendant. The final settlement of the claim did not result in any additional works being undertaken. Whilst the Claimant ought to be entitled to its costs up to 1 June 2023, the Claimant had failed to exhaust the complaints procedure before issuing the claim. The Court found that the Claimant should have moved onto the stage 3 of the complaints procedure before issuing proceedings. As such there was scope to criticise the Claimant for prematurely issuing proceedings. Rather than seek to assess the Claimant’s reasonable costs on the fast track up until 1 June 2023 and setting those off against the Defendant’s assessed costs of the proceedings, the District Judge found that a fair outcome would be that there should be no order as to costs.
Whilst not binding, the above decision is an example of how the Courts may sanction a party which does not comply with the PAP.
There are numerous examples of where parties have been deprived of all or part of their costs for unreasonably refusing to engage in ADR. The leading authority is Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 (11 May 2004). This case confirmed that the Court can depart from the usual rule on costs where it can be shown that the successful party has acted unreasonably in refusing ADR:
- CPR 44.3(2) provides that “if the court decides to make an order about costs (a) the general rule is that the unsuccessful party will be ordered to pay the cost of the successful party; but (b) the court may make a different order”. CPR 44.3(4) provides that “in deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including-(a) the conduct of the parties”. Rule 44.3(5) provides that the conduct of the parties includes “(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol.”
- In deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to ADR, it must be borne in mind that such an order is an exception to the general rule that costs should follow the event. In our view, the burden is on the unsuccessful party to show why there should be a departure from the general rule. The fundamental principle is that such departure is not justified unless it is shown (the burden being on the unsuccessful party) that the successful party acted unreasonably in refusing to agree to ADR. We shall endeavour in this judgment to provide some guidance as to the factors that should be considered by the court in deciding whether a refusal to agree to ADR is unreasonable.
- We make it clear at the outset that it was common ground before us (and we accept) that parties are entitled in an ADR to adopt whatever position they wish, and if as a result the dispute is not settled, that is not a matter for the court. As is submitted by the Law Society, if the integrity and confidentiality of the process is to be respected, the court should not know, and therefore should not investigate, why the process did not result in agreement.
- We recognise that mediation has a number of advantages over the court process. It is usually less expensive than litigation which goes all the way to judgment, although it should not be overlooked that most cases are settled by negotiation in the ordinary way. Mediation provides litigants with a wider range of solutions than those that are available in litigation: for example, an apology; an explanation; the continuation of an existing professional or business relationship perhaps on new terms; and an agreement by one party to do something without any existing legal obligation to do so. As Brooke LJ pointed out in Dunnett at para [14]:
“Skilled mediators are now able to achieve results satisfactory to both parties in many cases which are quite beyond the power of lawyers and courts to achieve. This court has knowledge of cases where intense feelings have arisen, for instance in relation to clinical negligence claims. But when the parties are brought together on neutral soil with a skilled mediator to help them resolve their differences, it may very well be that the mediator is able to achieve a result by which the parties shake hands at the end and feel that they have gone away having settled the dispute on terms with which they are happy to live. A mediator may be able to provide solutions which are beyond the powers of the court to provide.”
- In deciding whether a party has acted unreasonably in refusing ADR, these considerations should be borne in mind. But we accept the submission made by the Law Society that mediation and other ADR processes do not offer a panacea, and can have disadvantages as well as advantages: they are not appropriate for every case. We do not, therefore, accept the submission made on behalf of the Civil Mediation Council that there should be a presumption in favour of mediation. The question whether a party has acted unreasonably in refusing ADR must be determined having regard to all the circumstances of the particular case. We accept the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following: (a) the nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR would be disproportionately high; (e) whether any delay in setting up and attending the ADR would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success. We shall consider these in turn. We wish to emphasise that in many cases no single factor will be decisive, and that these factors should not be regarded as an exhaustive checklist.
What is commonly referred to as the “Halsey test” emerged which was that the Court should consider:
- The nature of the dispute
- The merits of the case
- Other settlement methods that have been attempted
- The cost of mediation
- Delay
- Whether mediation has a reasonable prospect of success
By way of an example, in Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor [2020] EWHC 1050 (Comm) (30 April 2020) the Court deprived the winning Defendant of 50% of its costs for refusing ADR.
The Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 (29 November 2023) considered whether the Court could lawfully order proceedings to be stayed and for parties to engage in an ADR process. The Court of Appeal concluded that it was lawful to stay existing proceedings and order the parties to engage in a non-Court based dispute resolution process.
Summary
Proper compliance with the PAP is likely to reduce costs and lead to claims being resolved more efficiently. Non-compliance with the PAP is likely to increase costs and give rise to costs sanctions. A winning party could be deprived of part or all of its costs for not complying with the PAP and/or refusing to engage in ADR.